Rethinking your Global Supply Chain

Article written by Matthew Webber

It is time to rethink our Global Supply Chains. The world as we know it has changed. The speed, the relationships, the priorities, the tastes. We can access information, goods and services quicker than ever – and our environments politically, environmentally and structurally seem more volatile than ever before. And this is before we even get to the great awakener in COVID -19.

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The problem is of course, many of our global supply chains have been designed for an era that was perhaps more predictable, more stable and perhaps in an era where global supply chains were considered to be an enabler of business strategy as opposed to being at the very core of value creation, and business model design.

The focus of global supply chains has arguably been historically to leverage efficiency, optimisation and cost advantage to create value. The current economic, political, environmental and now global health climate  now not only requires but forces us to rethink our Global Supply Chains beyond efficiency and cost advantage.

This begs the question – what then a Global Supply Chain must look like in order to thrive in such uncertain times. They must be;  

1.    Adaptable

Adaptability is the ability to be flexible to new situations, handle change and be able to balance multiple demands and stimulants. It is about being ‘comfortable with the uncomfortable’ and if nothing else it is having the right cultural mindset.  

It is of course more than culture – although that is where it will start. This will be having your business model design curated in a way that every layer of your organisation, internal and external can operate in a manner that provides speed, certainty and agility in environments that are changing.

This may require a rethink, and acceleration of the technology you use, the processes you deploy and operating rhythms you maintain. This also requires a disciplined focus on what you are not going to do, as much as what it is you are going to do.

2.    Sovereign

A sovereign supply chain is one that can be self-governed and controlled, and that mitigates your exposure to external influences whether they be political, environmental or other.

When using the word sovereign, it does imply the concept is at a national level – and this is of course true – we must have a national supply chain that secures our food and medical supplies for instance.

However, the concept also applies to our organisations – there are some products and services that you simply cannot afford to have disrupted by external events, and at the very least if they were to be disrupted you will have sufficient cover to not interrupt your delivery of value.

It will of course be unreasonable to control every element of your global supply chain. It is reasonable though, and important, that  you can control the elements that are critical to the value proposition.

To place in practical terms, a supermarket for instance could ill afford to be out of bread, milk and toilet paper – and their supply chains will reflect this. On the other hand, they may be able to manage through a period of disruption to supply of Mexican taco sauce!

What is a certainty is that global supply chains will remain – Global. That much is certain. We will not shift all production back on shore, that would be unreasonable, and impractical.

What will become though is far more strategic on what needs to be off shore, near shore and on shore to maintain a sense of sovereignty over your supply chain.

3.    Connected

It is easy to conceptualise a global supply chain in a linear fashion of connecting link with link, to take a product or service from concept to consumption. This is true, however in today’s world the level of connection your global supply chain requires is so much more.

Your global supply chain an eco-system of people, partners, process and systems, and they all need to be connected in a way that allows value to flow – not just linearly but in any direction as your organisation adapts to changing environments and new opportunities.

Connection is more than system and process alignment. It is also a way of being for your organisation, it is the philosophies, culture and behaviours that are demonstrated in all points of your global supply chain whether that be the internal culture of the organisation, the alignment of values with your suppliers or integration with the communities that you operate in.

It is about all in the global supply chain being connected into the purpose, the strategic direction and the objectives you are collectively trying to achieve. Only when you have achieved this values connection can you really turn your hand to connection from a system, process and business model design perspective.

Together is always better than alone. To be together though requires you to be connected.

4.    Digital

Robust connectivity is needed to enable faster, more frequent interactions across globally distributed supply chain networks. The seamless flow of information is critical not just simply for the efficient operation of your global supply chain, but to gain valuable commercial insights that create value.

It is the ‘now’ economy and we are all dependent upon information and technology to function.

Digital and data allows for greater connectivity and the ability to manage enormous amounts of data. It enables more opportunities for collaboration with your global supply chain and reducing duplication of effort.

Organisations that can use digital and data to create meaningful insights can create closer relationships with their customers and understand their needs greater. It allows the ability to develop global supply chains that are adaptable and configurable to the changing needs of the market. It also allows for the ability to develop greater efficiencies in operations and drive better service and financial performance

The insights gleaned from digitisation of your supply chain can then inform the technology and innovation that you require to deliver value.

5.    Commercial

Your global supply chain needs to remain commercial. This needs to be reflected in the arrangements, operational and financial structures, performance measurements  governance, financial controls and strategies you deploy.

As we transition quickly to the new world order, nothing will support you more in that effort than having complete commercial control of your global supply chain. Think of it like a formula one car that is designed to go fast through the engineering of controls into the operation of the car.  

Whether it be your customer, your operators, service providers and suppliers or your stakeholders  - they need visibility and assurance of the performance of your global supply chain.

They also need you to succeed so that they can succeed. The way you rethink your global supply chain needs to create value, and if you are not creating and distributing that value you will have limited opportunity in a modern world.

Adaptable, sovereign, connected and digital supply chains does not mean that you compromise your commercial imperatives – they are in fact the drivers to enhance them. This is a common mistake many make – they redesign their global supply chains in commercially unsustainable ways that really deliver little end to end, holistic value. The other mistake is of course that organisations focus solely on the efficiency and cost control elements – which of course can become a value dilution exercise if not linked in with strategy and value creation.

What is evident is this rethink is not optional nor is it a ‘nice to have’  – this is an imperative to business survival and relevance.

The cost of not having this rethink may have disastrous, if not fatal, consequences to achieving your organisation’s objectives and perhaps purpose.

Ultimately this will come down to how an organisation sees itself and how aware they are of their risk environment and of their opportunity to create. It will be a function of how close they are to understanding what is truly of value to their customer and also the communities that they operate in. Value remember, is in the eyes of the customer, not the operator.

The good news is that this all spells opportunity for those organisations that can transform their global supply chains into ones that are adaptable, sovereign, connected, digital and commercial. It just requires a rethink.

LOOKING TO rethink your supply chain? REACH OUT.

Our team has extensive global experience leading large scale Supply Chain Transformations from Factory to Customer across multiple industries. We have in depth capabilities around designing and delivering value in the Physical, Financial and Information (Digital) Supply Chain and can help your organisation create competitive advantage and value centred on the global supply chain. From strategy to design and execution. Contact us on whiteark@whiteark.com.au or explore our Supply Chain services here.

Article written by Matthew Webber