A boxer knows that it’s important to recover from a blow as quickly as possible and get back in the fight, and that comes from being fit, well-trained, and experienced. With the current pandemic and ensuing lockdown, we’ve been punched and are now at the stage of being dizzy, hurting, trying to focus, but all the time knowing that we need to get our hands up and elbows down in order to survive and then win.
The purpose of this blog is to generate ideas and thinking for people who are responsible for the supply chain within an organization, people who have just been ‘punched’ by the effect of the pandemic on their business, and are looking at how best to get back in the fight. The supply chain I am most familiar with is for a company that conducts R&D, Engineering, Purchasing, Manufacturing and Aftermarket Services for its portfolio. The thoughts put forward apply equally to all supply chains, to a greater or lesser extent. The approach is from a leadership perspective.
Up until February or March of this year, much of the supply chain focus has been on cost, delivery, internal capability, make-buy, ppm, customer disruption indices, supplier audits, enterprise risk management and many more. Rightly, this created a dashboard of key performance indicators (KPIs) that allowed effective governance and management of a business – it checked the ‘fitness’.
Now, as many economies are stalled and a recession predicted, leaders have to reflect on the current business and start asking, do we have the right portfolio, the needed capacity, make-buy level, supplier mix, internal vs external capability? In addition, this is the time to look at, or revisit, sustainability goals, social impact and societal obligations. Demonstrably move good intentions and the words from the Annual Report into the supply chain, and measure the performance.
To illustrate this: The UK Government is pumping 10s of billions in to the economy to support businesses and contractors, with more to come. The last number I saw was an eye-watering estimate of £50 billion and the EU government is being asked to back a stunning €1.5 trillion ‘virus fund’. There will be a payback required, both monetarily and socially – an obligation. The company that takes this lockdown time to plan the development of local (e.g. UK) suppliers away from a reliance on imports should, and will, be recognized. Now is the time to start researching which UK businesses can support a future supply chain, work with them and invest where needed, form joint ventures, optimize onshoring, collaborate to build capability and competitiveness. Use this knowledge to revisit the portfolio as well as the make-buy and the do-buy, continuously. Get future fit. You will build a new set of KPIs, with the ability to demonstrate to the market what you are doing – a positive social impact. The inverse scenario is that a company that has taken ‘tax payers money’ to support the business during this period, or uses the occasion in a self-serving manner, but cannot demonstrate that it is helping economic recovery, building resilience, or helping our society in some way, will be subject to social media backlash.
This all has a cost, but the balance can come from three main areas. Firstly, we have great UK resources to assist in using technology to drive efficiency, with establishments such as the Manufacturing Technology Centre in Coventry, the Advanced Manufacturing Park in Sheffield, the Advanced Forming Research Centre at Strathclyde University, and many more. Secondly, the cost of development of a resilient and flexible supply chain will pale against those resulting from the C-19 costs, or any similar threats in the future. Thirdly, there will have to be an open dialogue with local and central governments on tax incentives for investment of this type, as increased taxation can kill investment and drive detrimental behavior. A long-term view has to be taken, as a growing, successful, economy, with a positive trade balance, is a better answer than increased taxation. Japan seems to reflect some of this approach, when its government announced recently that it would provide ¥243.5 billion in funding to bring manufacturing from China to Japan and other countries.
Direct and indirect environmental sustainability should be built into the development of suppliers – perhaps something similar to, or additional to, the carbon neutral objective. The aforementioned research centres have sustainability objectives and capability, which can be designed into product development from its inception or for mature products. The complete chain can contribute – methods, materials, packaging, maintainability, and logistics.
The above are all incremental gains, building up in the complete supply chain to a large step. With this concerted approach, you can meet all financial, environmental and social obligations and start ingraining resilience – a fitness that can take the punch, as another one will be thrown. In the last twenty years we’ve had SARS, H1N1, Ebola and a major tsunami, on top of C-19.
As with a boxer, training and experience counts in this situation – when lessons of the past have been learned and what works, or does not, is likely known.
So the question that a company has to ask is, does it have a leader with the depth of experience, and the capacity to set up a task force, or project team, that looks at the resilience and flexibility of the complete supply chain? The leader has to have a clear mandate to establish, cooperatively build and execute the plan that encompasses the possibilities of reducing imports, local supplier development, JVs, innovative R&D, manufacturing, sustainability, etc. They have to have the experience of leading a company or supply chain during a significant upheaval, had to manage a crisis, reorganize, restructure and been successful doing it, as quickly as possible. Someone who can identify the single points of failure. Someone who will have to build a part-time team, and have the remit to pull from a company’s capabilities, as needed. Someone to set up the new KPIs, and eventually hand over the results to the ‘main team’ for business-as-usual. However, the business-as-usual will be a fitter, tougher, fighter that can get up before the count begins.
Additionally, having a person with relevant experience is invaluable during the crucial planning stage as you start at a higher level. I recall being at an excellent presentation a couple of years ago by the Dreadnought Alliance Chief Engineer. The Dreadnought submarine program is probably the single biggest government funded program in the UK, to date, and requires an enormous effort in planning and coordination across private and public organisations. In his presentation, the Chief Engineer described one of the first problems he came across when taking the helm – there was a dearth of experienced, knowledgeable, people. What he needed where the ‘grey hairs’ who could assess a submarine design and build program, from bow to stern, and pick out where the problems would be. It had been so long since a program of this type had been at the design stage that the experienced people had dissipated in to other ventures, or retired, along with the knowledge.
The leadership style for the above has to be hands-on, bringing people with them, sharing the vision, leading the negotiations, not concerned with inbred practice or thinking, fiefdoms or pet projects. Preferably someone from outside the current teams but bringing credibility with them. In many ways, the leader has to be the trainer and coach, an expert strategist whipping the fighter into shape, perfecting the jab, and knowing not only the fighter’s skills but also those of the opponents. The experienced leader/trainer/coach gives the fighter the best opportunity to win.
1. Include the optimization of working from home and creating permanent virtual teams (a great topic in itself). It can eliminate or reduce overhead and have positive environmental benefits.
2. Launching in May, the announcement of the Future Fund by the Chancellor of the Exchequer, Rishi Sunak, looks to be a big step in the right direction, https://www.gov.uk/guidance/future-fund
3. Businesses are already being publicly held to account for their behaviour in this pandemic situation. The following article illustrates this, with specific mention of Boeing, Wholefoods (Amazon) and Kraft Heinz, https://www.ethicalcorp.com/paul-polman-coronavirus-acid-test-stakeholder-capitalism
4. Reference, https://www.japantimes.co.jp/news/2020/04/09/business/japan-sets-aside-%C2%A5243-5-billion-help-firms-shift-production-china/#.XqAviWZKhOQ
5. Coincidentally, there is another article by Paul Polman looking at the environmental impact of how we conduct business. https://www.ethicalcorp.com/wake-call-we-must-live-within-our-planetary-boundaries-avoid-future-pandemics
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