Be Resilient, But Cultivate It

Resiliency is becoming a buzzword now because of the global stress test that supply chains are facing today due to the effects of the COVID-19 pandemic and highlights the vulnerability of the distributed network of global supply chains.  Starting in January, the COVID-19 effects on the global supply chain were starting to reveal themselves as product stopped moving from the Chinese interior to the ports.  As the factories started slowing, the linkage to the ports failed as well when Wuhan and surrounding provinces were quarantined.  Then shipping companies cancelled sailings causing vessels and empty containers to be out of position across the globe.  Even after countries and businesses re-open, the affects of this disruption will be felt for at least a year to reposition people, right-size assets, and determine the new demand profile going forward. 

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Position to Change

This Freightwaves article hypothesizes that the consumer driven world will change coming out this, and that is true.  The holding and positioning of inventory will be re-evaluated due to the numerous failures of critical supplies for healthcare and meeting the unprecedented demand to provide for all the people sheltering in place.  Having the operational resiliency and supplier base to deliver in adversity will be a strategic differentiator, as opposed to slow response companies being compelled to take action via the Defense Production Act to better supply the hospitals and healthcare providers in this time. 

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What is an incorrect assumption going forward is the narrative that automation will save us.  Automation isn’t saving us right now.  It’s the flexibility and resolve of people and businesses to change what they’re doing and aim towards the problem.  Automation is designed to complete a set of select tasks, and those tasks are performed within specified limits.  Operational labor is what will continue to power companies going forward through adaptability, and automation will continue to be incorporated into operations to reduce human travel and speed up product flow.  People, operational labor, will continue to be the driving force that is activated, innovative, and leaned on to provide the needed flexibility to scale up and down. 

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Execute the Plan to Adapt

In this time, the return of “business as usual” is an unknown, so businesses will need to be prepared to start back up as soon as possible, creating a huge first-mover advantage opportunity for prepared and equipped businesses to capture a larger market share while competitors are struggling to restart and ramp production. 

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Now is the time to evaluate your strategy to create operational flexibility and reliability for your business.  The operational labor flexibility can be created not by planning to averages (Flexiblity vs Forecasting) but rather by a new approach to the labor market (Workforce Flexibility).