A famous quote attributed to Mark Twain maintains that “continuous improvement is better than delayed perfection”. And while it’s safe to assume that his words weren’t intended for manufacturers back then, they could hardly be more relevant to the industry today.
As the new White House administration focuses on assessing and strengthening the U.S. supply chain, businesses may be tempted to sit idly by and wait to see what the government comes up with. After all, after two eventful years, many are hopeful that any changes recommended by the Supply Chain Review will give a much needed boost to their competitiveness at home and abroad.
Yet while such tactics may be understandable, they are not recommended. Rather than wait for the perfect silver bullet from policymakers, boards and leadership teams across the country should instead set out to lead their organization’s own journey of continuous improvement.
First of all, it will require a different mindset. Traditionally, the industry has treated supply chains as linear: a rigid process comprising distinct levels and segmented decision-making. This approach has also been largely successful, particularly in terms of reducing costs and streamlining operations.
However, it has its limits. For starters, multiple tiers tend to result in longer lead times – an unappealing prospect for today’s customers who demand ever faster, more personalized delivery experiences. Importantly, the inflexibility of the linear supply chain model also leaves manufacturers ill-equipped to deal with disruption, whether it’s regional supply issues, international trade tensions, or global black swan events. such as the pandemic.
Additionally, a segmented supply chain provides management and boards with relatively low visibility into what is really going on in their organization’s supply chain. And that restricts communication between different groups. Both severely limit the chain’s collective ability to act when threats or opportunities arise.
The solution lies in a shift in the offer Chains to the supply chain networks. Here, interdependent organizations manage risk and together optimize performance. In addition to strengthening relationships between different groups, this more supportive and open approach offers much more agility and resilience to all parties involved, characteristics that are increasingly vital for success in today’s unpredictable world. .
Of course, such a fundamental transformation takes time, but it is achievable. Additionally, manufacturers can take immediate steps to start moving to a networked supply chain approach now.
The first of these is to share their forecasts with the top tier suppliers. By giving early stages a more accurate and up-to-date picture of their expected short- and long-term demand levels, manufacturers can ensure that their key partners are able to prepare for and meet these needs at the industry level. advance.
Likewise, manufacturing leaders should place a renewed emphasis on working closely with tier one vendors to deepen their own understanding of the strengths and weaknesses of tier two vendors and beyond. This will build trust, improve collaboration, and help ensure they can respond faster and more effectively to opportunities and threats.
The last step is to talk more. Armed with the enhanced understanding provided by Step Two, manufacturing leaders should seek to establish better lines of communication with various vendors at all levels. In particular, this means ensuring that the demand signals and the forecasts they provide at level one are brought down to level two, especially in situations where lead times are longer, contracts more restrictive, or simply fundamentally more. risks.
By doing this, manufacturing companies can also avoid the danger of critical information reaching them slowly or perhaps never arriving. This, in turn, makes it easier to manage customer expectations and / or find alternatives when problems are chronic or intractable.
Move and improve
Of course, many companies may not yet have the tools and processes in place to completely switch to a network-to-supply chain approach. Others may feel suspicious or overwhelmed by the nature and extent of the changes required.
This is where Twain’s mantra becomes so relevant. Just as they shouldn’t wait for President Biden to give them a lifeline, senior management teams and boards should avoid focusing only on their company’s final destination. Instead, they should view change as an iterative journey of progress. One that starts with the small steps above and eventually evolves into the full-fledged characteristics of a supply chain network: greater visibility, smarter collaboration, and more agile risk management.
The good news is that they don’t work in a vacuum under any circumstances. In addition to the investment support and incentives expected from the Federal Supply Chain Review, manufacturers can expect continued advancements in technologies such as artificial intelligence (AI), analytics predictive and digital twins, all of which have the potential to take performance to the next level.
In other words, aid is on the way – politically, technologically and most likely financially. The key, however, is not to wait for it. In a business landscape that is changing faster than any in recent history, now is not the time to dwell on hoping that the perfect solution will arrive. For manufacturers, it’s time to move. And by improving.
The views expressed by the author are not necessarily those of Ernst & Young LLP or other members of the global EY organization.