By Roger Sanford
Two years ago, I embarked on an adventure that had been on my bucket list since I was eight years old: a trip to Antarctica to run a marathon. The logistics included countless hours of planning, international legal work and a crew of two for every runner. Perhaps not surprisingly, it’s a feat fewer than 1,000 people have ever accomplished. The survival guide warned me to prepare for the unknown, because whatever wasn’t expected was bound to happen. It turns out that even my careful planning couldn’t prepare for 50-foot seas, gale force winds or the stickiest mud on the planet. Despite these setbacks, my efforts to prepare made the difference between finishing the race and traveling to the earth’s most distant continent only to fail.
Preparing for what we do not know about the unknown is essential for survival, both in life and in business. It’s the extreme outliers, the “black swan” events, that are shaping today’s supply chain logistics and demonstrating the critical need for responsiveness, agility and forward thinking. CEOs face the unknown on a regular basis: business environments can turn hostile quickly and macroeconomics can shift. The chess game that is resource management must be delicately balanced to cover unplanned demands and opportunities. How can CEOs prepare for all of the possible eventualities?
In retrospect, sheer will triumphed over the adverse elements in Antarctica, but sheer will alone is unsustainable in business, where every day is a race. Competitors are not friendly, the elements are harsh and teamwork sometimes falters. CEOs who know what resources are available at all times, who build strong alliances, encourage teamwork, exude personal credibility and foster corporate adaptability will win the day. Every CEO wants to finish first (or, at least, in the lead pack), but whether due to ego, a false sense of invincibility or poor preparation, many do not finish the race at all. We’ve all had to learn the hard way that no company is too big to fail. In this way, business and nature are very alike – neither is kind to the unprepared.
As leaders, we understand that a mishandled response to an unknown stimulus can ultimately lead to the demise of a company. The process of formalizing a strategy begins with knowing where the start and finish lines are, how best to close the distance between them and considering what isn’t known as carefully as what is known. Variables along the course make visibility the core of a well-developed plan to cross the finish line ahead of the pack. Turning a blind eye to risk, to the unpredictable, drastically increases the likelihood of stumbling along the way, putting companies at risk. Like the runners in Antarctica who failed to finish the marathon, lack of preparation for the unknown often proves to be the difference between success and failure.
It is often said that it’s not businesses that compete . . . it’s their supply chains. But to run with the lead pack, CEOs must first understand how to prepare for the unexpected, which requires strategy, information and a level of organization that can meet the unknown and race past it on the way to the finish line. Shedding light on what isn’t being seen is the purpose behind cutting-edge supply chain logistics. To that end, here’s a list of the seven “unknowns” of supply chain management and how CEOs can rise to the challenge of strengthening their operations against the unexpected.
1) Unknown Risk
Risk is inherent in business; it’s as built into the model as the bottom line. But executives who lack knowledge about what resources are available, what their supply chain is capable of or committed to, what expenses are incoming, or which assets are available or missing, are incorporating additional unnecessary risk. Unforeseen circumstances can have a compound effect if CEOs do not have access to information that will allow them to respond quickly. For larger corporations, multiply that problem across dozens of business units, all attempting to operate under one corporate banner but without any centralized oversight. One of our customers, a manufacturer and distributor of hardware, was challenged by supply chain operations that centered around one warehouse manager, their lone source of tribal knowledge. Beyond the problems they were experiencing due to manual processes, keeping all knowledge of a company’s warehouse operations inside the head of one individual is extremely risky. If he were to leave his position, their warehouse would have come to a standstill until someone else was brought up to speed. We implemented a WMS solution that allows for that tribal knowledge to be available on demand, instead of locked inside the head of one warehouse manager. Centralizing all of that vital knowledge proved to be a massive step in mitigating risk.
2. Unknown Resources
Effective resource management is critical for responding to today’s mercurial market. CEOs can no longer get away with not knowing their inventory levels, who is ordering what, or when supply is coming or going. Next-generation business processes and technology shed light on the entire supply chain, creating a 360-degree view into process efficiency, tracking and performance. This sort of real-time stream of information is crucial to effective resource management. Companies that overcome poor visibility in their supply chain can dramatically improve their competitive landscape. Companies that suffer from a high level of opacity frequently find themselves pushed aside, left behind by competitors with the processes in place to maximize their resources. Responding appropriately to the market requires CEOS to have immediate access to up-to-date information and the automated processes in place to respond.
3. Unknown Delays: Over the past year, the worldwide supply chain has struggled with adapting to losses, delays and sourcing challenges brought on by earthquakes, tsunamis, political uprisings and everything else an interlinked global economy can unexpectedly throw in the path of business. Beyond the challenges at the macro level, companies must also deal effectively with delays within their own organizations. Facing unplanned circumstances with the wrong solution in place (or worse, without any solution) will only dig a deeper hole, preventing executives from making informed decisions on behalf of the entirety of the organization and increasing the risk of delays. One of our customers came to us with this exact problem; they were risking relationships with their suppliers because of a ponderous 10-week processing cycle. Even as one of the most respected energy companies in America, they were unable to see what was happening across multiple business units. This meant slow decisions and out-of-date information were disrupting operations. Post-implementation, they were able to gain a level of transparency that drastically mitigated risk and united their organization.
4. Unknown Needs
When embarking on a journey, the research of those who have gone before often proves to be invaluable. This applies to an Antarctic adventure as much as it does to supply chain automation projects. Each journey is unique, so forging an alliance with a partner who’s been there before can eliminate uncertainty. An effective partner will have the knowledge and resources to get a solution up and running in rapid order. Pinpointing operational needs and fulfilling them quickly is more than essential for winning; it’s essential for survival. A few years ago, one of our potential clients expressed skepticism about whether an automated solution could effectively process the number of transactions they see every year. One quick call to a current customer resolved that concern – the potential client discovered that not only could the solution handle the numbers they required, it was already processing that number each month for our current customer. It’s important for CEOs to find a credible partner that can demonstrate the capability to meet the company’s needs, both now and as they grow.
5. Unknown Demands
Without effective oversight and control, CEOs struggle to meet market demands and risk crippling their organizations by wasting valuable time, capital and human resources. Immediate demands, coupled with complex supply cycles and the potential for the unknown, can create unnecessary vulnerability. The capability to integrate existing resources with immediate needs is critical; a truly cross-functional solution maximizes value. To meet this need, enterprises are increasingly turning to cloud-based applications that offer flexibility, functionality and lower cost of ownership over traditional systems. Cloud solutions offer real-time oversight and control from any internet-connected device. Switching to a Service-Orientated Architecture (SOA) provides seamless integration with existing systems at a fraction of the cost. It’s the fastest, least expensive way to add an adaptive capability that can help right companies hobbling toward the finish line. CEOs require the adaptability only cloud services can provide in order to meet the unpredictable demands of the future.
6. Unknown Strife
Not all of the “unknowns” present themselves outside the four walls of corporate headquarters. Internal struggles, lack of belief in the company vision and employee strife can end the race before it even begins. The human need to contribute, to be supported and acknowledged in their role, are major contributing factors toward how well a company responds to the demands placed on their supply chain. Teamwork and empowerment are like water to a marathoner. Without them, dehydration sets in, resulting in disorientation or worse. To stay on track, information must flow freely, allowing individuals to feel that they are accomplishing something, that their work is meaningful. The right tools and the right mindset are often what distinguish winners from losers. CEOs who empower their team will be surprised at how many cross the finish line with them.
7. Unknown Support
A company is only as healthy as its supply chain. CEOs are routinely held responsible for their organization’s ability to meet the demands of their customers and effectively manage their suppliers. Providing a product or service carries with it an unstated promise of quality, of customer support, of intent to meet the demand of the consumer. But how can a CEO guarantee their company’s ability to carry through with that if they cannot effectively track the “health” of their supply chain? Overpromising is a risky way to conduct business, something even large ERP vendors have been known to do; the fallout from that has been repeatedly plastered across the headlines over the last several years. Just as CEOs have a responsibility to shore up the supply chain so their companies can meet their obligations, solution partners should be held accountable for the promises they make about the functionality of their software. If running the race with a partner, it’s best to find one who can be trusted.
The race is on. The need to know what is happening allows for rapid response to the unplanned. It may be impossible to know what you as a CEO don’t know, but it is possible to prepare for the unknown. A company’s position in the winning group is the CEO’s responsibility. Knowing the company’s supply chain and tribal knowledge is the difference.
Roger Sanford is the CMO of Irving-based Apptricity. Apptricity provides enterprise based software to automate supply chain management including warehouse management, asset tracking, order fulfillment, inventory management, supplier integration, and transportation management. www.apptricity.com
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