Converting Dreams into Reality Requires Supply Chain Attention to the Details of Feasibility

Just a year ago, we were celebrating the heroic efforts of people at many supply chain organizations in response to the pandemic-related disruptions of 2020. This was summarized in a Jan. 29 post to this blog by Pia Orup Lund (see Reinforced in 2020: Necessity is the Mother of Invention). Some of the most impactful solutions arise out of constrained situations that force us back to foundational thinking. During this challenging time, leaders in the consumer retail sector responded to shifts and surges in demand by remaining focused on customers and performance. They moderated their longer-term growth aspirations and simplified product portfolios to focus on core products. These companies were rewarded with record-breaking performance during the year, providing insights and evidence on the benefits of diligent portfolio management that no amount of analyzing, strategizing and debating could provide (see SKU Optimization: A Proactive Approach to Drive Profitable, Risk-Optimized Growth for Consumer Products).

As we entered the new year, there was significant opportunity and numerous resolutions to capitalize further on insights from these challenges, as documented in Industrial and Chemical Manufacturers Learn and Respond to the Cost and Cash Challenges of 2020. Findings and sentiments included the following:

• With few exceptions, supply chain organizations experienced deficits in the agility and resilience of their supplier portfolios and supply networks under stress compared to the response of their people. These deficits impaired inventory control and supply response during the disruption.
• In addition to pursuing enhancement of technology-enabled, decision-support capabilities, leaders recognized an opportunity to use the experiences and insights of 2020 as a springboard for organizational growth and development. In the words of one leader, “many people rose to the occasion and thrived, while others were bothered by a disruption to their routine and are eager to return to normal.” Leaders must consider “different risk profiles and behavioral tendencies” as they configure, staff and develop their organization to meet challenges of the future.

It was not long into the new year that our profession was presented with a new series of challenges that have continued to grow into what is now known as supply chain gridlock. The response from supply chain professionals this year has been somewhat bimodal:

• We’ve continued to take many calls from companies seeking to apply simple, idealistic approaches such as lean, pull-based tactics in the face of unprecedented shortages and network constraints related to materials, labor, energy and freight. Simple models for pull-based replenishment can’t solve the realities of risk, constraints and economics across a complex network (see Severe Supply Shortages Illustrate the Need to Rethink Constraint-Based S&OP Balancing)
• There has also been a return to intellectualizing solutions in terms of the various attributes of agility, resilience, visibility, collaboration and digitalization. Others have turned towards the hope that increased emphasis on purpose-driven strategies for sustainability and circularity would take hold to align and energize stakeholders in this environment of gridlock.

Two of the most pragmatic and positive blog posts this year have come from two of my supply chain planning colleagues:

• Strive for “Faster, Higher, Stronger — Together” in the spirit of the Olympic motto — Micheal Youssef
• Adopt a scout mindset towards the goal of making better decisions — Cristina Carvallo

These sentiments capture a fundamental attribute of supply chain excellence: remaining connected to reality under challenging conditions to drive better performance. There are many unresolved questions associated with some of the longer-term aspirations (somehow expressed as commitments) for goals like sustainable packaging and energy transformation. At some point, supply chain planners will need to become involved to ensure that there is feasibility in the commitments and projections being made by their strategic stakeholders. This will require the courage to demand that realities and probabilities, which have been already been documented, be considered and factored into ongoing projections and commitments. For example:

• From Packaging in the 2020s: New Opportunities Battle Enduring Challenges: Gartner analyst John Blake wrote, “Many materials that are 100% recyclable have low single- and double-digit recycling rates (due to) a lack of global infrastructure to collect, process and reintroduce post-consumer packaging. … The economics are just not there.”
• From The EU’s Looming Mismatch Between Climate Ambition and Minerals Supply: the Financial Times reported on Nov. 18, 2021, that stated aspirations by the European Union to achieve a 55% reduction in greenhouse gases by 2030 have not been accompanied by the necessary actions to secure supply of metals that would make this possible. One looming challenge is for lithium and other materials required by electric vehicle batteries. This is projected to drive global demand to eight times current levels. Current capacity projections, based on announced global extraction investments, account for only one-third of estimated demand.

This is not to say that supply chain planners don’t see the value in these purpose-driven objectives. But planners are not promoters of goals and policies. Their primary responsibility is to ensure that stated goals and commitments are built upon a foundation of realistic and feasible plans.

Paul Lord
Senior Director Analyst
Gartner Supply Chain
Paul.Lord@gartner.com