Day 3 of ASCM CONNECT explored building resilient supply chains, strategies for emerging from COVID-19 stronger and better than we were before, and lots more. Check out the recap here.
We’re currently living through a sixth wave of global disruption: the digital age. And just like the previous five, it’s both an opportunity and a threat. “It is creation, and it’s destruction,” Sean Culey, president of Sean Culey Ltd. told ASCM CONNECT attendees. He explained that technology will be key to enabling supply chains to maximize sixth-wave opportunities. This will require reimagining, redesigning and aligning business models; creating more compelling value propositions; and improving efficiency and accuracy.
“So much money is being spent on digital transformation projects for so little return right now,” Culey said. “Successful digital transformation has nothing to do with technology; it’s about transforming the mindset, culture and strategy of the organization. The what and how of technology only make sense when applied to a compelling ‘why?’”
It’s essential to view digital tools as methods for innovating operations, reducing human error, streamlining processes and gaining insights into what’s actually going on in the end-to-end supply chain. The resulting transparency enables organizations to redirect human effort away from “value-destroying activities toward value-creating ones,” Culey said, adding that the ultimate goal is to build more reliable, agile and sustainable supply chains.
If you don’t understand your comprehensive supply chain environment, it will be impossible to secure the risks that are present. Consequences can include product tampering, recalls, lawsuits, government fines, malware infiltrations and more. “How do you defend against these types of things?” Keith Turpin, chief information security officer at The Friedkin Group, asked ASCM CONNECT attendees. “The best methods are not technology, [but] business processes.”
Following are 6 key strategies:
- Define your security requirements in every RFP. When they show up later in the contract, it can affect pricing.
- Examine and document all assumptions. Too often, we assume a vendor will perform a certain way or a product will be built according to certain guidelines. Verify those things, and record them.
- Ask potential suppliers how they manage risk. “Even well-established suppliers can have problems,” Turpin warned. “A lot of times in supply chain you are responsible — not only for your protection, but for the protection of everyone. You can be held accountable, even if the failure wasn’t yours directly.”
- Assess supplier security, whether you’ll be sharing sensitive data or your supplier will manage critical intellectual property. Consider using a third-party service to rate suppliers.
- Fully comprehend regulatory requirements for both you and your suppliers — and specify how compliance will be measured.
- Identify back-up partners. “If one of your suppliers gets hit with ransomware and is out of commission for a week, what does that look like for you?” Turpin asked. “Do you have an alternative?”
“The issue of risk in supply chains is not a new one,” The Economist’s Samantha Grenville told ASCM CEO Abe Eshkenazi during their educational session today. “What’s key here is that unexpected shocks are happening more and more often. You’ve got financial crises, you’ve got extreme weather, geopolitical turmoil, trade tensions, bush fires.” She called the current global pandemic not a turning point, but a focal point that’s shining a light on supply chain risk.
Eshkenazi noted that COVID-19 is affecting every aspect of supply chain and asked Grenville what steps will be crucial moving forward. She cited three strategies:
- Agility. Organizations that are able to ingrain a culture of rapid decision-making and flexible processes can quickly respond or adapt to changing market conditions.
- Visibility. To fully understand vulnerabilities and dependencies throughout the value chain, this must involve cultivating relationships and monitoring direct suppliers, as well as those that are many levels removed.
- Planning. It’s important to stress test to see whether you can withstand a big shock — and be sure to plan to the results of that test.
To learn more about ASCM’s partnership with The Economist, visit ascm.org/supply-chain-resilience.
Is it time to redefine supply chain visibility? Panelists Amy Augustine, director at U.S. Cellular; Jason Gillespie, director at DHL; Jonathan Root, program manager at the NASA Goddard Space Flight Center; and David Shillingford, chairman of Resilience 360, considered that vital question along with moderator Greg Schlegel, adjunct professor at Lehigh University. “Whether it’s a pandemic or severe weather or geopolitical risk or the hundreds of other things that might happen,” Shillingford stressed that the answer is the same: visibility.
“Knowing who your supplier is, is great,” he said. “But if you don’t know where the facilities are, you’ve got a real blind spot. If you don’t know the tier two supplier, it may or may not matter.”
Gillespie noted that most supply chains probably have some kind of visibility, but not all they want and need. “Many also need to manage a large network for a lot of customers, who have very large networks themselves,” he noted. “What’s the right information to really filter up to the top?”
Root said that NASA is using dashboards to better see what’s going on and how their networks are functioning. He said that it’s been very critical at this difficult time to understand the things that are influencing the supply chain— and to digest them in order to figure out what to focus on. He added, “The pandemic has reinforced the importance of fulfilling that challenge to build this magical thing called visibility.”