Building agility – putting your money where your mouth is
It’s a lesson 2020s has taught us well; when the world changes, supply chain must be ready to change with it. The madness of the last few months has made agility supply chain’s biggest buzzword. Although Industry 4.0, fickle global leaders playing turf wars and tariff games causing geopolitical tension, and rapidly evolving consumer trends already had organisational and structural agility on everyone’s wish list, COVID-19 introduced a need for speed and the ability to pivot on a dime.
Historically, reliable demand signals became untrustworthy. Everything we once knew and built our organisations on changed, fast, moving agility up the wish list. But agility isn’t something to be wished for or delegated.
Building agility takes a thorough understanding of precisely what that means to your organisation, the costs, and the implications. It means making some tough calls.
But agility isn’t something to be wished for or delegated. Building agility takes a thorough understanding of precisely what that means to your organisation, the costs, and the implications
It sits on the shoulders of leaders, and quite frankly, it takes balls (figuratively speaking of course), time and money. Now more than ever, leaders must lead. With heart, with care, with courage, and with values.
Your teams are composed of individuals, all of which are dealing with the life changes brought on by COVID-19. Knowing how stress and emotions are playing into the day to day running of your organisation, being empathetic, and keeping staff motivated and aligned are crucial in overcoming the challenges that lie ahead.
Developing a culture where employees feel safe to be human, ideas are listened to, and relationships are nurtured should be a key focus for all leaders. Mind your employees, and your employees will mind your dollars.
Leadership and driving true results-gaining-teamwork have always been more than hanging posters on your wall or a one weekend retreat. However, COVID-19 has opened the door to a new corporate norm of remote work and more flexible work hours. Leaders must understand the impacts of these changes to team dynamics and incorporate new team-building strategies.
The black swans
Building agility means you and your team should be skilled at triage. Build contingency plans, know who is responsible for what, ensure employees are empowered to act and establish clear lines of communication.
Remember that black swan events are a time to act, not discipline. While a strong leader should always be keeping an eye out for opportunities, leave investigating root causes or driving improvements until after the waters have calmed. When the shit hits the fan, keep your team focused on the matter at hand.
“Change your opinions, keep to your principles; change your leaves, keep intact your roots.”- Victor Hugo
If there’s one thing the entire world is likely to agree on, it’s that nobody saw 2020 coming. Today’s supply chains are struggling to keep pace with the changes, lacking the agility required to mitigate risks, much less capture the upside opportunities created by the sudden shifts in, well, everything. And yet long term political or economic stability isn’t even on the horizon.
Demanding retailers with stringent delivery requirements and high penalties, fluctuations in both demand and supply, global supply chains with JIT inventories all fight against the very agility companies need to manage turbulent waters. And let’s face it, in both B2B and B2C customer purchasing patterns and requirements are likely to become even more capricious. Improving agility while maintaining service standards has always been difficult, yet it has become significantly more challenging and is not likely to get any easier.
When facing the effects of a global pandemic, leaders are susceptible to losing sight of long term objectives, traded in for the cost-cutting measures required to remain profitable during a recession. However, long term organizational health and viability requires leaders to remain rooted in their balance of short-term and long-term mindsets, objectives, and deployment strategies.
Gaining agility means you can respond faster and more fluidly to demand or supply changes and ensures your business continuity. So what does that look like, and what’s it going to cost you?
Organisational and supply chain agility can be gained through a myriad of strategies that increase competencies, shorten lead times, and improve efficiencies, such as:
● Gaining labor flexibility through cross-functional process knowledge training
● Improving structural agility with increased or modification of assets
● Shortening cycle times through standardized manufacturing processes
● Improving efficiencies through streamlined process inputs
● Reducing interruptions to operations through supplier integrated capacity planning
● Optimizing inventories and production efficiencies with improved demand forecasting
● Robust risk management and disruption response planning
● Distribution network optimization (not minimization)
● Streamlined stock replenishment process
Further agility strategies may include fine-tuning your customer base, rationalising SKUs, and standardising raw materials. Industry 4.0 brings another onslaught of possibilities that can help propel you forward, whether through data analytics that makes for better-informed demand planning, or machine learning that reduces quality control labour requirements while improving output, or predictive maintenance that minimises your downtime.
Leaders must understand which of these strategies makes sense for their business, and be ready to put their money where their mouth is.
Each and everyday manufacturers face a death by a thousand cuts as they fight to avoid penalties and maintain service levels by delivering On Time and In Full (OTIF.)
The complexities of manufacturing and sales and operations planning are understood by few. Companies may manage hundreds if not thousands of SKUs, each calling for different raw materials, machine setups, quality processes, packaging, and shipping requirements.
Multi-level operations require the synchronization of a myriad of resources, from maintenance and quality technicians to machine operators, raw materials and Work in Process (WIP.)
Implementing agility strategies is a high-resource, high-cost, and time-consuming initiative.
Even something as seemingly simple as approving a new raw material may mean an endless task list of system changes, internal and customer quality and operations processes to be followed, to list just a few of the things to be considered:
● A new business partner or item master setup
● Bill of Material (BOM) adjustments
● FG product weight change
● Review of all required regulatory and quality documentation
● Customer approval processes including testing requirements, manufacturing and shipping trials
● Internal quality processes such as third-party testing, supplier audits, and pre-production trials
● Machine setup or Standard Operating Procedures (SOP) may need to be revised
● Cycle times for corresponding WIP or FG may need to be adjusted
● UOM and currency conversions
● Receiving requirements such as Advanced Shipping Notices (ASN), packaging and label requirements for scanning and traceability purposes may need to be addressed
Put plainly, leaders need to know their stuff, where their current systems or overly cumbersome processes may be failing them, and where the opportunities for improvements lay.
“Storms make trees take deeper roots.”- Dolly Parton
Ensuring alignment of values across your organisation is often under-appreciated, perhaps even much laughed at, seeming like idealistic, bombastic, empty drivel. And let’s be honest, it usually is.
Company values are thrown onto newsletters and websites, maybe even mentioned in a “town hall” meeting, but are rarely spoken of again.
Whether you call them values, or guiding principles, these ideas of who you are as a business, what you stand for and what you believe intertwine with your objectives, and should become your roots.
As budgets shrink, project lists grow, and black swans continue to crash the party, your values are what hold and your team steadfast through storms, guiding daily decision making and prioritizing and helping you chart your courses of action.
From McKinsey, “Agile practices can help companies navigate an increasingly volatile and unforgiving global economic environment. Only a few companies, however, are adopting these approaches broadly enough to improve their supply-chain performance significantly.”
Why? Because it’s hard. A global pandemic and the ways of the new world, where corporate social and environmental responsibility is starting to take president over dollars, where heartstrings are beginning to pull harder than purse strings, and where yesterday bears little resemblance to our tomorrows, the challenges are plenty.
And yes, it takes “balls,” money, and time. It means leaders must get their hands dirty, understand what’s involved and what’s at stake, forge a plan, and in sticking with the term, go balls to the wall on implementation. Because this is hard stuff, and it takes hard work.
But those who are agile and poised ready to seize new opportunities as old markets die off, and new ones will emerge as victors. And those who don’t, won’t.