Antifragile Supply Chain Management

By Tim Payne | January 31, 2023 | 0 Comments

Supply ChainPower of the Profession

Late last year I was lucky enough to be made a Gartner Research Fellow. This is sort of like a Ph.D. program that enables an analyst to pursue a specific research project. My chosen research project is antifragile supply chain management.

I’ve been in supply chain management, first as a practitioner and then as an analyst, for more than 30 years and it’s been a real journey of discovery. But if I’m honest, my biggest discovery is that not a lot has fundamentally changed since I first started putting in mainframe planning systems back in the 1980s. The heart of the problem, I think, is that many of the sacred cows of supply chain management are still alive and kicking and preventing us from making big advancements that will help in uncertain operating environments.

I’ve now started the research into antifragility and what it might mean. First things first, Gartner is using Nassim Nicholas Taleb’s definition of antifragility from his 2012 book Antifragile: Things That Gain From Disorder that is summarized in following figure.

We can interpret these three states for supply chain as shown in in the next figure.

It’s important to note that antifragility and resiliency are not the same thing — although they are sometimes mistakenly, and confusingly, used interchangeably. Resiliency is about surviving uncertainty. Antifragile is about thriving under uncertainty. Those are two quite different things.

Trouble defining antifragility

A recent literature review revealed that there is not yet much out in the market on antifragile supply chain, and certainly not a discernible definition of antifragile supply chain management that supply chain professionals could rally around. That’s something Gartner aims to address. But a few things are becoming clearer:

  • Most companies still have fragile supply chains. The techniques, concepts and approaches they use haven’t fundamentally changed for decades and continue to result in damage caused by uncertainty.
  • Increasing numbers of companies are striving for resiliency (since early 2020, resiliency has become a very sought-after capability for obvious reasons). But most are still applying fragile supply chain management concepts and approaches. In many ways “resiliency” is another buzzword being thrown at supply chains without any fundamental change happening to truly enable it.
  • Resiliency requires a big shift in thinking to move away from fragility. Those companies seriously chasing resiliency haven’t fully achieved this shift yet. Instead, they mainly rely on add-on concepts such as control towers and visibility to try to improve responsiveness but without fundamentally addressing the inherent fragility in their original supply chain decision making and execution. They are clinging onto fragile planning approaches, for example, focused on plan accuracy, achievement and decision centralization. A fragile supply chain hates mistakes and wants to eliminate them. A resilient supply chain sees mistakes as information to try to avoid them. An antifragile supply chain loves mistakes, as it can learn and improve from them.
  • Antifragility requires another significant shift in thinking to move from resiliency. However, there will be approaches required for resiliency that should be springboards from which to develop antifragility. For example, there’s the drive towards much higher numbers of scenarios that support more experimentation on the supply chain, and the decoupling of decisions across the supply chain to enable it to flex and absorb more effectively.
  • A significant change, as a company moves from fragile to resilient to antifragile will be in how it perceives supply chain redundancy. A fragile supply chain views redundancy as a cost to reduce (e.g., inventory, capacity, suppliers, etc.). A resilient supply chain will view redundancy as an insurance premium — a cost to bear that insures against some degree of damage to corporate value. An antifragile supply chain will view redundancy as an investment opportunity — a set of options that will likely give a positive return the more uncertainty there is. This switch in how redundancy is perceived will be fundamental, I believe, in a company’s success in achieving antifragility.

Questions and Answers

Is antifragile supply chain management that next big thing in supply chain? Well, I hope it isn’t just another buzzword to add to agile, responsive and resilient. In which case, we — as supply chain professionals — have missed a golden opportunity to redefine what good looks like for supply chains that must operate and thrive under increasingly uncertainty conditions.

Is antifragile supply chain management for everyone? I don’t think so. It’s a bit like our maturity models and the level of maturity a company desires. Some companies will value antifragility, others won’t. It depends in large part on their competitive environments.

Can a company go straight from fragile to antifragile? Again, I don’t think so. There are some important lessons to learn and steps to take in moving from fragility to resiliency which are important precursors in the move from resiliency to antifragility.

Can you do antifragility with existing technology? Probably not. Most existing supply chain technology is still fragility based. I’ve lost count of the number of providers that are going to improve the accuracy of the forecast using AI/ML, or are going to improve responsiveness through visibility, control towers or command centers. Even the current use of digital twins is at best resiliency-orientated in supporting supply chain simulations.

Over the next few months, I’ll try to get better answers to these questions and others. If you have thoughts to share, please let me know.

Tim Payne
VP Analyst
Gartner Supply Chain
Tim.Payne@gartner.com

 

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