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2023 Reset Report v3.1.pdf

A critical look at three years of supply chain disruption. Using quantitative and qualitative research, Lora Cecere, Founder of Supply Chain Insights, looks critically at the factors within companies that drove resilience and the factors less successful. Companies that won were aligned, used market signals, decreased process latency, used scenario planning, and implemented descriptive analytics. Those that fared worse, had tight integration of supply chain planning to ERP, were not aligned, and were focused on a digital transformation strategy.

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Lora Cecere
Founder of
Supply Chain Insights LLC
THE NEED FOR A
SUPPLY CHAIN RESET
Reflections on Three Years of
Supply Chain Disruption
MAY 2023
DISCLOSURE
Your trust is important to us. As such, we are open and transparent about our financial relationships and our
research processes. This independent research is 100% funded by Supply Chain Insights.
Please share this data freely within your company and across the industry. All we ask for in return is
attribution when you use the materials. We publish under the Creative Commons License Attribution, and you
will find our citation policy here.
2 THE NEED FOR A SUPPLY CHAIN RESET | 2023
2
TABLE OF CONTENTS
Overview .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 4
Executive Summary  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 5
Managing the Supply Chain in a Period of Unprecedented Disruption	�������������������������������������6
Shifts in Trade .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 10
Eliminating Organizational Barriers  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 11
Mounting Risk.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 13
Ineffective Response .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 13
Redefining the Supply Chain Response .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 14
Going Digital: Current and Future State .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 16
Managing Key Metrics in Uncertain Times .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  19
Recommendations .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  23
Summary .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  24
Appendix  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  26
About Supply Chain Insights .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 27
About Lora Cecere .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  27
3
THE NEED FOR A SUPPLY CHAIN RESET | 2023 3
March 2020 to March 2023 presented unprecedented volatility
for the supply chain leader. Supply chain leaders managed
supply chains in the face of thirty-six months of disruption. The
goal of this report is a reflection to highlight the learnings and
required changes needed in the global supply chain.
The report is based on a quantitative survey fielded in the
summer of 2022. To better understand the results, the data
were socialized with business leaders from September-April
2023. Here we share insights from both the quantitative
analysis and the qualitative discussions.
Overview
4 THE NEED FOR A SUPPLY CHAIN RESET | 2023
4
This report shares a meta-perspective on global supply chain
disruption that started in March 2020 and ended in March 2023.
The research aims to harvest learnings and share insights to
help companies improve reliability.
During this thirty-six-month period of uncertainty, global supply
chains struggled to deliver predictable results. Today, with
mounting inflationary pressures, the challenges continue. Cash
is king, and financial viability is the overarching goal.
Improving supply chain effectiveness is front and
center of boardroom discussions as companies
face lingering issues with order and supply
variability while improving cash flow. To
drive improvement, leaders need to drive a
rethink of planning and analytics. Current
supply chain practices are not equal to the
challenge.
In our research, organizational alignment
was the most significant factor to improve resilience (the
ability to drive reliability in the face of variability). While
consultants may wave their hands and tout new approaches
and technologists hawk their wares, the most crucial step that a
business leader can take today to improve future performance
is developing a shared vision for the organization on supply
chain excellence. For organizations layered in functional metrics
and driving a cost agenda, this is a tougher nut to crack than
most understand.
We find that only some companies are transparent and cross-
functionally aligned on the definition of supply chain excellence.
Organizational alignment issues grew three-fold over the past
decade, with gaps widening between financial and supply chain
teams.
In the definition of supply chain excellence, the traditional leader
values cost reduction but is blind in how to value time and align
cycles against cost-driven agenda. Over the past three years,
supply chain cycles shifted. Currently, the processes are out of
balance. Order cycles--the requested time from order to delivery-
-decreased while supply cycles –the time to procure materials--
increased. E-commerce models exacerbated this trend while
supply variability challenged order reliability. Organizations
focus on cost and do not know how to measure planning cycles
or how to value time. This needs to change.
Companies needed quicker answers with better insights, but
current organizational processes put the supply chain on the
back foot. Processes are too slow and are out of step with
market dynamics. During the pandemic, companies struggled
with planning systems, turning off the optimizers, and using the
technology as a system of record. Over 90% of decisions were
made using Excel spreadsheets. In this research, we find that
process latency, the time for an organization to decide
using a traditional S&OP process, is two-to-six
weeks. In the face of variability, this is two-
to-six weeks too long to make allocation or
procurement decisions.
The answer is not digital transformation.
In the survey, 48% of companies were driving
digital transformation, but descriptive analytics was the only
element that improved performance. For many, the digital
transformation processes focused on automating traditional
processes to make the processes faster or eliminate paper.
This is a mistake. As a result, companies operating digital
transformation strategies did not outperform their peer group.
Today, we find digital supply chain transformation is over-hyped
by technology providers with a need for more clarity on value.
The focus is on digital not on building transformational process
value. As discussed in this report, the issues are many, but a
central problem is the lack of a clear roadmap to define core
capabilities. While companies speak of reducing risk, doing the
same old process in the face of unprecedented variability, but
only faster, could be the most significant risk of all.
Now is a good time to reflect. The past thirty-six months of
disruption, signals a need for a fundamental change in how
organizations translate strategy to process definition and
market signals to action. Closing both gaps are essential to
improve resiliency and balance sheet performance.
Executive Summary
5
THE NEED FOR A SUPPLY CHAIN RESET | 2023 5
Organizations muscled through the three years of a disruption
using brute force. Our qualitative interviews found that 91% of
manufacturing companies turned off the optimizers in their
planning systems and turned to spreadsheet modeling. As
shown in Figure 1, the most significant issues were supply
and demand variability, leading to inventory issues. Current
supply chain planning
deployments were not
equal to the challenge.
While only 30% of
companies had what-if
analysis, for those that did,
the systems were inflexible
due to the tight integration
to backoffice systems.
Demand variability was
the largest business issue,
but companies are the
most reluctant to change
demand processes. Most
thinking is hard-wired
for supply. Solving the
problem requires rethinking
the processes between
commercial and operations
teams. Marketing-driven
organizations are not
market-driven. Likewise, a sales-driven organization is not
market driven. Rethinking demand processes requires a step-
change in thinking.
Shifts Over Time
To understand the severity of issues, in 2022, the Federal
Exchange Group (FED) launched the Global Supply Chain
Pressure Index1
to help companies and economists predict
outcomes. The Index uses a composite of market data sources
to plot disruption every month.
In Figure 2, we show the level of disruption plotted over
the timeframe of 1998 to 2023. The peak disruption was
in December 2021. In March 2023, the level of disruption
measured in the index fell
to a level seen in November
1998. Note that the level of
disruption from 2010 to 2020
was low and that the level of
disruption from the recent
period was 3-4X higher than
that of the recessionary
period of 2007-2009.
The global supply chain is
built on three assumptions:
rational international
government policy,
available and reasonably
priced transportation,
and low variability. During
this period, all three of
these assumptions were
challenged. This index tracks
logistics impacts well but
could be more effective in projecting the issues of global unrest
and variability.
This three-year period we had four distinct phases. Each
presented a different set of challenges for supply chain teams.
Companies more advanced in the design of supply chain flows
were able to navigate the multiplicity of challenges better than
their peer group.
Managing the Supply
Chain in a Period of
Unprecedented Disruption
Demand Variability 45%
Supply Variability 43%
Labor Availability 35%
Ocean Freight Costs 30%
Inadequacies of Planning Systems 25%
Having the Right Inventory 18%
China Lockdowns 18%
Availability of Air 10%
Support by the Executive Team 8%
Figure 1. Severity of Issues During the Disruption
Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study
Q12. What were your greatest issues?
1
About the Global Supply Chain Pressure Index (GSCPI): The GSCPI integrates a number of commonly used metrics to provide a comprehensive
summary of potential supply chain disruptions.
6 THE NEED FOR A SUPPLY CHAIN RESET | 2023
6

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2023 Reset Report v3.1.pdf

  • 1. Lora Cecere Founder of Supply Chain Insights LLC THE NEED FOR A SUPPLY CHAIN RESET Reflections on Three Years of Supply Chain Disruption MAY 2023
  • 2. DISCLOSURE Your trust is important to us. As such, we are open and transparent about our financial relationships and our research processes. This independent research is 100% funded by Supply Chain Insights. Please share this data freely within your company and across the industry. All we ask for in return is attribution when you use the materials. We publish under the Creative Commons License Attribution, and you will find our citation policy here. 2 THE NEED FOR A SUPPLY CHAIN RESET | 2023 2
  • 3. TABLE OF CONTENTS Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Managing the Supply Chain in a Period of Unprecedented Disruption �������������������������������������6 Shifts in Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Eliminating Organizational Barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Mounting Risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Ineffective Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Redefining the Supply Chain Response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Going Digital: Current and Future State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Managing Key Metrics in Uncertain Times . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 About Supply Chain Insights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 About Lora Cecere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 3 THE NEED FOR A SUPPLY CHAIN RESET | 2023 3
  • 4. March 2020 to March 2023 presented unprecedented volatility for the supply chain leader. Supply chain leaders managed supply chains in the face of thirty-six months of disruption. The goal of this report is a reflection to highlight the learnings and required changes needed in the global supply chain. The report is based on a quantitative survey fielded in the summer of 2022. To better understand the results, the data were socialized with business leaders from September-April 2023. Here we share insights from both the quantitative analysis and the qualitative discussions. Overview 4 THE NEED FOR A SUPPLY CHAIN RESET | 2023 4
  • 5. This report shares a meta-perspective on global supply chain disruption that started in March 2020 and ended in March 2023. The research aims to harvest learnings and share insights to help companies improve reliability. During this thirty-six-month period of uncertainty, global supply chains struggled to deliver predictable results. Today, with mounting inflationary pressures, the challenges continue. Cash is king, and financial viability is the overarching goal. Improving supply chain effectiveness is front and center of boardroom discussions as companies face lingering issues with order and supply variability while improving cash flow. To drive improvement, leaders need to drive a rethink of planning and analytics. Current supply chain practices are not equal to the challenge. In our research, organizational alignment was the most significant factor to improve resilience (the ability to drive reliability in the face of variability). While consultants may wave their hands and tout new approaches and technologists hawk their wares, the most crucial step that a business leader can take today to improve future performance is developing a shared vision for the organization on supply chain excellence. For organizations layered in functional metrics and driving a cost agenda, this is a tougher nut to crack than most understand. We find that only some companies are transparent and cross- functionally aligned on the definition of supply chain excellence. Organizational alignment issues grew three-fold over the past decade, with gaps widening between financial and supply chain teams. In the definition of supply chain excellence, the traditional leader values cost reduction but is blind in how to value time and align cycles against cost-driven agenda. Over the past three years, supply chain cycles shifted. Currently, the processes are out of balance. Order cycles--the requested time from order to delivery- -decreased while supply cycles –the time to procure materials-- increased. E-commerce models exacerbated this trend while supply variability challenged order reliability. Organizations focus on cost and do not know how to measure planning cycles or how to value time. This needs to change. Companies needed quicker answers with better insights, but current organizational processes put the supply chain on the back foot. Processes are too slow and are out of step with market dynamics. During the pandemic, companies struggled with planning systems, turning off the optimizers, and using the technology as a system of record. Over 90% of decisions were made using Excel spreadsheets. In this research, we find that process latency, the time for an organization to decide using a traditional S&OP process, is two-to-six weeks. In the face of variability, this is two- to-six weeks too long to make allocation or procurement decisions. The answer is not digital transformation. In the survey, 48% of companies were driving digital transformation, but descriptive analytics was the only element that improved performance. For many, the digital transformation processes focused on automating traditional processes to make the processes faster or eliminate paper. This is a mistake. As a result, companies operating digital transformation strategies did not outperform their peer group. Today, we find digital supply chain transformation is over-hyped by technology providers with a need for more clarity on value. The focus is on digital not on building transformational process value. As discussed in this report, the issues are many, but a central problem is the lack of a clear roadmap to define core capabilities. While companies speak of reducing risk, doing the same old process in the face of unprecedented variability, but only faster, could be the most significant risk of all. Now is a good time to reflect. The past thirty-six months of disruption, signals a need for a fundamental change in how organizations translate strategy to process definition and market signals to action. Closing both gaps are essential to improve resiliency and balance sheet performance. Executive Summary 5 THE NEED FOR A SUPPLY CHAIN RESET | 2023 5
  • 6. Organizations muscled through the three years of a disruption using brute force. Our qualitative interviews found that 91% of manufacturing companies turned off the optimizers in their planning systems and turned to spreadsheet modeling. As shown in Figure 1, the most significant issues were supply and demand variability, leading to inventory issues. Current supply chain planning deployments were not equal to the challenge. While only 30% of companies had what-if analysis, for those that did, the systems were inflexible due to the tight integration to backoffice systems. Demand variability was the largest business issue, but companies are the most reluctant to change demand processes. Most thinking is hard-wired for supply. Solving the problem requires rethinking the processes between commercial and operations teams. Marketing-driven organizations are not market-driven. Likewise, a sales-driven organization is not market driven. Rethinking demand processes requires a step- change in thinking. Shifts Over Time To understand the severity of issues, in 2022, the Federal Exchange Group (FED) launched the Global Supply Chain Pressure Index1 to help companies and economists predict outcomes. The Index uses a composite of market data sources to plot disruption every month. In Figure 2, we show the level of disruption plotted over the timeframe of 1998 to 2023. The peak disruption was in December 2021. In March 2023, the level of disruption measured in the index fell to a level seen in November 1998. Note that the level of disruption from 2010 to 2020 was low and that the level of disruption from the recent period was 3-4X higher than that of the recessionary period of 2007-2009. The global supply chain is built on three assumptions: rational international government policy, available and reasonably priced transportation, and low variability. During this period, all three of these assumptions were challenged. This index tracks logistics impacts well but could be more effective in projecting the issues of global unrest and variability. This three-year period we had four distinct phases. Each presented a different set of challenges for supply chain teams. Companies more advanced in the design of supply chain flows were able to navigate the multiplicity of challenges better than their peer group. Managing the Supply Chain in a Period of Unprecedented Disruption Demand Variability 45% Supply Variability 43% Labor Availability 35% Ocean Freight Costs 30% Inadequacies of Planning Systems 25% Having the Right Inventory 18% China Lockdowns 18% Availability of Air 10% Support by the Executive Team 8% Figure 1. Severity of Issues During the Disruption Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q12. What were your greatest issues? 1 About the Global Supply Chain Pressure Index (GSCPI): The GSCPI integrates a number of commonly used metrics to provide a comprehensive summary of potential supply chain disruptions. 6 THE NEED FOR A SUPPLY CHAIN RESET | 2023 6
  • 7. Phase 1. Lockdowns and Travel Disruption. The period of March 2020 until the vaccinations in the spring of 2021 shifted consumer demand and pushed healthcare into a crisis. Consumers moved spending from the purchase of services to products. In this process, Government subsidies overheated the economy. In healthcare, the shift from preventive to pandemic care put stress on all healthcare supply chains. Food service shifted to at home eating and beauty services from shops to home. The impacts rippled across all industries. As a result, the value of history that traditional supply chain processes relied on became worthless. Supply chain demand planning processes lost their rudder. Global growth during the pandemic increases 2-3X. (The US GDP was 5.7 %, up from 3.4% in 2020.) Phase 2. Wrangling Transportation Capacity Issues. The height of this disruption period was December 2021. In this period, ocean freight challenges increased. Port constraints in Europe and North America rendered 12.4 percent of global ocean vessel capacity unavailable. The top eight ocean carriers controlled over 80% of the ocean freight market in 2021 and made over $150B in profits, up nine times from the prior year. The rate of Asia-US West-Coast Ocean inbound reached levels that were 170% higher than at the same time in 2021. Asia-US East Coast prices are 200% higher than rates for this week last year. Few companies used indexes, like the Baltic Index or warehouse capacity, to manage their networks. Labor issues spiked due to the demand increases. Companies were surprised, but the issues were predictable. Phase 3. Wartime and Untangling Knots. In February 2022, Russia invaded Ukraine, increasing the global pressure to build a responsive wartime machine. The redefinition of trade with Russia impacts the nickel, palladium, wheat, and inert gas markets. In December 2022, the transportation capacity issues eased, but Korean delivery times increased, and Asian growth slowed with rising Chinese COVID issues. Asian to US container trade falls 30% as ocean freight rates fall precipitously. Oil companies maximized profits with a ripple effect in the chemical and plastic industries. Chemical inventories plummeted to low levels posing a risk for supply to all industries. Phase 4. Inflation. Current levels of inflation and volatility were the highest in forty years. The Consumer Price Index (CPI) rose 5.3% yearly in March 2023. The thirty-six months of inflation, starting in April 2020 and peaking in July 2022, are declining, but the supply chain’s price pressure is residual. Traditional supply chain decision processes focus on volume or price, not price/volume/mix trade-offs. The pain level is high, and most companies have the wrong inventory. With higher demand variability, traditional historical order patterns forecasting techniques become less relevant. Across all four time periods, companies were reactive not proactive. Planning systems were unequal to using available market signals, and organizations moved through each period by brute force. This occurred even though over 90% of companies have deployed Enterprise Resource Planning (ERP) -2.00 -1.00 0.00 1.00 2.00 3.00 4.00 5.00 28-Feb-1998 31-Dec-1998 31-Oct-1999 31-Aug-2000 30-Jun-2001 30-Apr-2002 28-Feb-2003 31-Dec-2003 31-Oct-2004 31-Aug-2005 30-Jun-2006 30-Apr-2007 29-Feb-2008 31-Dec-2008 31-Oct-2009 31-Aug-2010 30-Jun-2011 30-Apr-2012 28-Feb-2013 31-Dec-2013 31-Oct-2014 31-Aug-2015 30-Jun-2016 30-Apr-2017 28-Feb-2018 31-Dec-2018 31-Oct-2019 31-Aug-2020 30-Jun-2021 30-Apr-2022 28-Feb-2023 Figure 2. Supply Chain Global Pressure Index 7 THE NEED FOR A SUPPLY CHAIN RESET | 2023 7
  • 8. and supply chain planning technologies. The reason? The answer lies in the lack of a shared strategy and understanding of supply chain excellence stemming from organizational alignment. Over the past years, when supply chain volatility and price changes were low, companies implemented Integrated Business Planning (IBP), with many multi-step meetings and tight integration of the supply chain to the financial budget. These steps increase process latency (the time to make a decision) and increase the bullwhip effect. The learning? The deployment of tight integration to the budget with multiple step meetings needed to be more consistent and faster for this period of unprecedented variability. The answer is agile planning with robust scenario modeling. Less than 25% of companies have this type of deployment, but most struggle with the redesign of work to introduce scenarios into decision processes and drive executive alignment at the speed of business. Significant employee turnover occurred in the supply chain organization during the last decade. As the first and second- generation supply chain employees retired (many with tribal knowledge), the organization’s understanding of planning systems and processes significantly declined. We find a sea- change in the team’s understanding of planning. Companies were less capable of using their technologies. The skill level was low to manage the heightened levels of inflation shown in Figure 3. In our research, we find very few organizations had planners that had managed through the 2007-2009 recession or the inflationary periods of the 1980s. Planning technologies forecast volume but could be more effective in managing shifts in product mix or changes in revenue structures that accompany inflation management. The evolution of procurement commodity decision processes is a black hole in the technology stack. Inflationary periods require tighter organizational alignment, which, as we can see in this report, was an issue. -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 GDP (Growth Rate) Inflation v Definition of Supply Chain Management IBP Figure 3. United States Inflation Rates From 1931 to 2023 8 THE NEED FOR A SUPPLY CHAIN RESET | 2023 8
  • 9. 9 THE NEED FOR A SUPPLY CHAIN RESET | 2023 9
  • 10. The issues of supplier reliability and political unrest drive supply chain uncertainty. Over the last decade, variability was relatively low. This rise in variability, coupled with political unrest, is driving greater insourcing and the redesign of the supply chain for in-region sourcing. Making this shift requires more profound skills in supply chain planning and network design. The implications for shifts in trading blocs will impact growth and decrease reliability. Organizations have the opportunity to be more responsive and proactively design the supply chain for in-market sourcing and better managing market signals across the organization. Companies need shift their processes to be equal to the challenge. Shifts in Trade ______________________________ “We are witnessing a fragmentation of the global economy into competing blocs, with each bloc trying to pull as much of the rest of the world closer to its respective strategic interests and shared values. And this fragmentation may coalesce around two blocs led respectively by the two largest economies in the world. Today the United States completely depends on imports for at least 14 critical minerals. And Europe depends on China for 98% of its rare earth supply. Supply disruptions on these fronts could affect essential sectors of the economy, such as the automobile industry and its transition to electric vehicle production.” Christine Lagarde EUROPEAN CENTRAL BANK PRESIDENT MARCH 2023 ______________________________ The global supply chain is built on three assumptions: rational international government policy, available and reasonably priced transportation, and low variability. 10 THE NEED FOR A SUPPLY CHAIN RESET | 2023 10
  • 11. Table 1. Conflicting Objectives Executive Board Focus Financial Team Supply Chain Team Response Fear. Stabilize the organization in an uncertain market: focus on nominal growth. Control. Budget development based on historic revenue with assumptions. Reliability. Review of historical demand levels and capabilities while attempting to rationalize markets. Variability Financial Viability. Let's make it through a tough market. Cash. Implement cost controls with a focus on managing cash efficiency. Cost. Manage supply constraints and inflation cost impacts with wild swings in mix and demand. Customer Service Frustration. Why can we not fill orders? Alarm at write-offs. Inventory as Waste. Manage inventory as a liability. Inventory as a Buffer. Improve resilience and considerations for forward-buying and hedging. Time Strategic View of Time: M&A, market analysis, and positioning. Short-term View. Budget-driven discussions and analysis for quarter-to-quarter and year-to- year considerations. Multi-year View. with a focus on and outside of lead time. Groups are attempting to align product mix and define capacity requirements. Organizations that outperformed in the pandemic were aligned and focused outside-in. (Using channel and supplier market signals with a lower dependency on enterprise transactional data.) Companies that under-performed, needed to be more aligned. Groups with the most significant gaps had a focus on driving a tight integration to enterprise systems. In disruption, alignment is important to deliver resilience (consistent balance sheet results despite variability). The organization has conflicting points of view between the executive board, financial team, and supply chain teams. The supply chain is a complex, non-linear system. Within the system, there are trade-offs and constraints. For example, there are consequences as the product mix changes, demand volatility shifts, or lead times grow. Managing the supply chain requires a constant rethinking of options and variability. As variability increases, the need for modeling increases: fewer good decisions can be made on spreadsheets. Successful companies measure “when did they know” and “how quickly did they make a good decision.” During the disruption period, 94% of the decisions were made through spreadsheets. The multiplicity of scenarios, options, and outcomes is not visible on a spreadsheet. The inter- relationships are complex and far-reaching. In Table 1, we share a perspective on the tension across teams. When comparing the current organizational alignment gaps of 2022 to research fielded in 2012, we find the holes doubled between manufacturing and procurement teams (increasing to 39%) and operations and finance teams (rising to 40%) while growing slightly between sales and operations teams (increasing to 48%). (The gaps between commercial groups and supply chain organizations have always been significant.) These gaps are statistically significant at an 80% confidence level. Alignment gaps are a risk issue. Few organizations measure organizational alignment and work to close these gaps. As a result, these increasing gaps in alignment and clarity of the definition of supply chain excellence were an unspoken risk entering the pandemic. The issues are more significant for the Eliminating Organizational Barriers 11 THE NEED FOR A SUPPLY CHAIN RESET | 2023 11
  • 12. organization with annual revenues over $5B. These gaps cannot be closed by a simple focus on S&OP or implementing a technology. Gap closure requires leadership and strategy clarity: both are missing in today’s organization. New Product Dev’t & Distribution Sales & Operations Manufact’g & Procuremt. Operations & IT Finance & Operations Sales & Finance Marketing & Finance Sales & Marketing Marketing & IT Finance & IT Sales & IT CSR & Operations 64% 92% 87% 65% 79% 74% 82% 51% 30% 28% 18% 13% 44% 38% 45% 23% 49% 25% 36% 39% 28% 49% 44% 25% Greatest Gaps Figure 4. Organizational Alignment in 2019 Importance Performance Gap 79+30+0+91+45+0+64+18+0+76+30+0+67+24+0+64+24+0+73+33+0+58+24+0+52+21+0+73+42+0+21+9 Figure 5. Organizational Alignment in 2022 Logistics and Supply Chain Planning Supply Chain Planning & Manufacturing Logistics & Procurement Sales & Supply Chain Planning Finance and Supply Chain Planning Finance and Manufacturing Finance and Procurement Customer Service and Distribution Corporate Social Responsibility & Manufacturing Procurement & Manufacturing Supply Chain Planning & Customer Service 79% 73% 30% 91% 45% 42% 21% 9% 64% 76% 73% 58% 52% 30% 67% 64% 24% 24% 21% 24% 33% 18% Greatest Gaps Source: Supply Chain Insights LLC, Analytics Digital Transformation Study Q9. In your opinion, how important is it for each of the following pairs of teams to be aligned within your supply chain? Q10. How aligned do you believe that these same pairs of teams actually are with your company? 12 THE NEED FOR A SUPPLY CHAIN RESET | 2023 12
  • 13. The World Economic Forum publishes an annual report on Supply Chain Risk. The analysis is survey-based, representing the views of 1,200 experts. The results shown in Figure 6, collected from September to October 2022, reflect the collective opinion of the respondents in 2022. The problem is that risk is viewed from a traditional lens in this analysis. Employee turnover and organizational alignment are not measured and managed as a risk. The view is a supply- centric view of the world deeply wedded-to traditional thinking. As we reflect on the thirty-six months of disruption, perhaps the most significant risk is supply chain leaders’ inability to adapt to question supply chain practices. Organizations struggle from Group Think. To drive the needed change, businesses need to unlearn what are believed to be “best practices” –these are traditional processes honed from over the past two decades when disruption was lower. Rethinking convention to embrace the Art of the Possible in technological advancements is an issue. For example, in work on building outside-in processes to use market signals better and minimize waste, the most significant obstacle was the inability of the group of twenty-eight business leaders to unlearn and rethink convention. Mounting Risk. Ineffective Response      ­  € ­  € ‚ ‚ ƒ     „€      ‚ † ‡ € Figure 6. World Economic Forum Risks 13 THE NEED FOR A SUPPLY CHAIN RESET | 2023 13
  • 14. Real-time data? Real-time processes? In the 5G-enabled era, time is measured in seconds and milliseconds. In the world of data, a real- time event is any action that triggers data transfer or initiates a process change within fifteen minutes. While business leaders speak of real-time processes, today’s supply chain moves slowly, encumbered by process latency and disconnects—issues with batch processes and interfaces bog-down decisions. Most supply chain technology is legacy: implemented in the scramble for Y2K remediation. In addition, outsourcing manufacturing and logistics increases the number of supply chain nodes and parties. Today, the average company in this research outsourced 34% of manufacturing and 42% of logistics. Data latency of conventional interfaces increases latency and introduces supply chain black holes where getting answers to questions at the speed of business is near impossible. Over the last decade, the supply chain has become more complex and incapable of adapting to variability. Unstructured data abounds, yet company technology investments are on the better use of structured data. As a result, 80% of available data is not used. Variability analysis is highly dependent on the management of unstructured data. Learning how to use image analysis, pattern recognition, streaming data, and text mining is an opportunity for all. In the industry, there is no safe space for business leaders to test and learn with technology innovators to advance knowledge and process understanding. Supply chain leaders love shiny objects. Organizations quickly follow fads: investments in the digital supply chain are the current trend. This research shows that 45% of manufacturers greater than $1B in annual revenue deploy a digital strategy. If legacy systems are an issue, the question is, “Will this improve outcomes?” This research casts doubt on the current strategies deployed. Less than 7% of companies deploying a digital supply chain strategy saw a balance sheet improvement in 2022. So, the enlightened reader might ask, “Why can a digital supply chain strategy not help? Couldn’t the deployment of machine learning and artificial intelligence to better sense and shape demand and align the supply chain improve outcomes?” The answer is no. Testing shows that better optimization engines using historic data sources (examples are order and shipment Redefining the Supply Chain Response ______________________________ Most digital strategies focus only on data feeds of transactional data. A human brain thinks based on sensing and feedback loops and is both analog and digital. Today’s supply chains do not sense, and the response is based on history. Most processes operate without a closed feedback loop. Unfortunately, history, in today’s variable times, is insufficient. ______________________________ ______________________________ “An idiot with a plan can beat a genius without a plan.” Warren Buffet INVESTOR ______________________________ ______________________________ “If you don’t know history, then you don’t know anything. You are a leaf that doesn’t know it is part of a tree.” Michael Crichton AMERICAN AUTHOR AND FILM MAKER ______________________________ 14 THE NEED FOR A SUPPLY CHAIN RESET | 2023 14
  • 15. history) yields marginal improvement. The answer lies in redefining work to use market signals to redesign supply chain processes to sense and adapt in the face of variability. To improve resiliency, we must admit mistakes and be open to relearning and questioning existing practices. For example, over the last decade, supply chain planning processes focused on tight integration of enterprise data to be precise on inaccurate data. The tight integration of planning into Enterprise Resource Planning (ERP) was a mistake. In 2020-2023, market data was essential, and enterprise data was secondary. However, organizations could not use market data. Companies have multiple systems that are not aligned and synchronized to work together. When deployed, each system operates on planning assumptions that are typically not updated based on market data. To remedy this situation, companies must invest in a unified data model across planning systems tied to a supply chain planning master data layer. Implementing a planning master data layer takes market signals and tracks the trends to inform the optimization engines. In this research, we find that most digital supply chain strategies for planning are an extension of the goal of improving transactional data. These deployments will not improve business outcomes. The danger is many projects will only make business outcomes worse. ______________________________ “Plans are worthless, but planning is essential.” Dwight Eisenhower 34TH PRESIDENT OF THE UNITED STATES, SUPREME COMMANDER OF THE ALLIED FORCES IN WORLD WAR II _____________________________ 15 THE NEED FOR A SUPPLY CHAIN RESET | 2023 15
  • 16. Digital means different things to each company; no industry standard definition exists. In this research, the most successful investments with the highest satisfaction are in manufacturing automation. Unfortunately, this is only 3% of current projects deployed. We find that planning and visibility initiatives have a low probability of success. Unfortunately, these projects represent over 50% of the digital focus. These are the most needed and the most likely to fail. The reason for failure? Companies need more clarity on definition and the challenge to rethink architectures based on newer forms of analytics. In Figure 7, we share the current focus of digital transformation programs. To drive forward, cultures need to change, and supply chain leaders need to retool. Digital transformation is not a project to be implemented. Instead, it is a set of concepts to be tested. On the journey, leaders need to embrace failure as success– the value of learning needs to equal the drive for Return on Investment (ROI). As shown in Figure 8, the current state shows that only three-five percent of supply chain leaders are familiar with new approaches/terms like cognitive computing, sentiment analysis, or NoSQL. These are promising techniques, but 97% of companies need the culture to test and learn to drive process innovation. The gaps between IT and business leaders are a significant roadblock to driving change. Supply chain leaders are slow to adopt the concepts of Web 2.0 and even slower to test the advancements of Web 3.0. As a result, the most significant value of digital transformation projects came from deploying descriptive analytics. We observe an endless cycle. Companies want proven solutions and ask for a well-defined Return on Investment (ROI), but chase shiny objects. For those not involved in the business, the cycle defies logic. In the journey, leaders use many terms needing more well-grounded objectives. As shown in Figure 9, only 3% feel that they are innovators driving early adoption. Going Digital: Current and Future State Figure 7. The Focus of Digital Transformation Programs Driving better supply chain visibility Improvements in supply chain planning Sensing market conditions to improve the demand signal Improving order-to-cash processes Improving procure-to-pay processes Automation of transportation decisions Automation of factories 25% 25% 19% 15% 12% 4% 3% Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q17. If the company has a digital transformation initiative, what was the focus? 16 THE NEED FOR A SUPPLY CHAIN RESET | 2023 16
  • 17. Figure 8. Familiarity with New Analytic Approaches Cloud-based technologies Data visualization Data lakes for data mining Internet of Things (IoT) (streaming analytics) Software robots Machine learning Unstructured data mining Pattern recognition Open-source analytics Graph databases Cognitive computing Blockchain Drones Sentiment analysis Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q34. What is your company’s current level of investment in the following analytics strategies? 18% 13% 8% 23% 20% 13% 3% 8% 23% 3% 3% 3% 3% 20% 33% 45% 13% 60% 25% 3% 3% 20% 43% 30% 8% 23% 40% 30% 3% 23% 25% 40% 8% 28% 15% 35% 10% 18% 38% 28% 5% 20% 18% 30% 25% 18% 28% 28% 15% 25% 13% 18% 25% 3% 43% 15% 18% 23% 8% 28% 18% 18% 40% 20% 10% 10% 8% 40% 20% 10% 5% 8% Don’t Know 0 No Interest 1 Evaluating 2 Live Deployment 4 Mainstream Adoption 5 Experimentation / Pilot Program 3 17 THE NEED FOR A SUPPLY CHAIN RESET | 2023 17
  • 18. Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Q33. Which of the following best describes your company’s approach to investing in new analytics strategies, in general? We are usually the last to try a new technology We are usually among the last to try a new technology We are usually in the middle when it comes to trying a new technology We are usually among the first to try a new technology We are usually the first to try a new technology Figure 9. Appetite for Innovation in Supply Chain Technology 10% 30% 0% 3% 58% If someone in your organization is touting the deployment of a digital supply chain strategy, stop the discussion and ask three questions: 1. How do you define digital? Why does it matter in the face of heightened variability? How can we use it to improve insights in the increasing world of gray? 2. How do we redefine work to improve answers with unprecedented variability to make decisions at the speed of business? (The speed of business is increasing while process latency using traditional approaches is growing.) 3. What is the value of time in our supply chain? Push for answers. Then and only then can you make the right decisions to keep your supply chain from going over a cliff in a time of continued disruption. 18 THE NEED FOR A SUPPLY CHAIN RESET | 2023 18
  • 19. Two critical metrics for the supply chain leader are cost and inventory management. Comparing the metric shifts over time is valuable to understand the current state. Cost of Goods Sold Managing cost is the number one day-to-day imperative for the traditional supply chain leader. The task is not easy because of a world of dysfunctional metrics and growing gaps in the organizational alignment. This was especially true over the last period of disruption. Only one manufacturing industry— the food industry-- successfully reduce costs over the past decade. The industry’s cost reduction driver was the evolution of agriculture, improving the cost structure of significant ingredients like wheat and corn. Global food production increased 30 percent over the last decade . Costs in the Automotive, Automotive Parts, and Aerospace Defense (AD) sectors grew faster in the period before the pandemic than during the pandemic. In contrast, the costs of Beverage, Chemical, and Household Products Industries during the pandemic spiked. The opportunity is the redesign of flows and trading relationships within supply networks. What Can We Learn? The Automotive, AD, and Automotive Parts rose with the escalating costs of the Semiconductor Industry. At the same time, the rising costs of Beverages, Chemicals, Household Products, and Pharmaceuticals spiked with the increase in oil prices. Managing sourcing strategies and relationships within supplier The formula for Cost of Goods Sold (COGS) is: (Beginning Inventory + Inventory Costs) - Ending inventory _______________ Cost of Goods Sold Managing Key Metrics in Uncertain Times Figure 9. Days of Inventory by Industry Over the Period of 2004-2022 Industry Segment Year Segment (M$) % Difference Difference 2004-2006 2007-2008 2009-2013 2014-2019 2020-2022 2009-13 vs 2014-19 2009-13 vs 2020-22 2014-19 vs 2020-22 2004-06 vs 2020-22 Automotive 35,500 46,667 53,675 61,364 65,138 13% 18% 6% 29,638 Aerospace Defense 9,273 11,125 12,634 13,710 14,220 8% 11% 4% 4,947 Chemical 3,482 6,339 6,855 6,977 8,419 2% 19% 17% 4,937 Semiconductor 2,274 2,770 3,170 4,709 7,043 33% 55% 33% 4,769 Pharmaceuticals 3,758 4,894 6,111 6,467 8,435 6% 28% 23% 4,677 Automotive Parts 4,687 6,194 7,023 8,002 8,561 12% 18% 7% 3,874 Food 5,721 7,575 9,404 10,682 9,558 12% 2% -12% 3,837 Medical Device 746 1,158 1,336 2,066 3,966 35% 66% 48% 3,220 Household Products 5,123 6,502 6,925 6,813 7,632 -2% 9% 11% 2,509 Beverage 2,264 3,083 3,993 4,146 4,702 4% 15% 12% 2,438 Beauty 1,282 2,034 2,322 2,620 3,011 11% 23% 13% 1,729 Average Inflation 3.96% 5.32% 3.84% 3.10% 5.99% -0.74% 2.15% 2.89% 19 THE NEED FOR A SUPPLY CHAIN RESET | 2023 19
  • 20. networks has the most significant promise for the supply chain leader to manage costs. The journey of managing costs starts by changing what we measure and control. Most companies manage functional costs, not total costs or margins. The lowest functional cost in manufacturing or transportation does not translate to the lowest supply chain costs. The answer lies in redesigning the fundamentals of the supplier networks. Traditionally brand leaders push costs into the network and outsource. Sticks are used more frequently than carrots. No brand owner owns the impact of their forecast data. Few manage complexity. All accept the traditional definitions of trading partners in the network. There is an opportunity for business leaders to redesign network relationships. Here are two examples: Reduce Semiconductor Complexity. Could the downstream brand owners reduce the semiconductor industry’s cost by reducing complexity? Fabs are expensive, and the semiconductor industry sits four to five levels back in the supply chain. Today, the industry is at the whim of its downstream partners: forced to manufacture items with high demand variability and low volumes. The bullwhip impact has significant cost implications for downstream industries. Reducing network complexity could improve efficiency by enabling longer manufacturing runs and lower change-over times. Today, there are no cross-company initiatives to consider the impact of current demand patterns on this critical, but fragile industry. Redesign Transportation Optimization. How about the impact of oil prices on transportation-centric industries? Again, a cross-industry redesign to use network data and reduce dead-head miles could help. Transportation optimization needs to be designed from the outside in. The processes of route guides based on historic lane usage and tenders drive up costs. The low acceptance of first-pass tenders is an issue. Major shippers could declare current transportation optimization technology legacy and partner with new forms of transportation tech to drive a redesign from using inside-out (historical enterprise data) to moving goods based on dynamic deployment using market data. This type of collaborative market play could improve the resiliency of the industry. The traditional approach of a myopic focus on controlling enterprise costs has not reduced the Cost of Goods Sold. The opportunity is for brand owners to be better trading partners and redefine relationships based on shifting markets. For most, Figure 10. Days of Inventory by Industry: Comparison across Years Industries Years % Difference 2009-13 vs 2014-19 2004-2006 2007-2008 2009-2013 2014-2019 2020-2022 Medical Device 110 113 131 143 163 53 Beverage 115 119 138 191 164 49 Pharmaceuticals 155 144 170 195 197 42 Beauty 89 108 116 125 124 35 Automotive Parts 49 55 64 69 81 32 Household Products 50 51 57 74 82 32 Aerospace Defense 94 89 97 103 123 29 Chemicals 62 58 64 80 88 26 Automotive 35 39 41 45 49 14 Food 50 51 56 58 59 9 Semiconductor 61 68 80 91 68 7 Inventory levels by industry. Source Y Charts. 20 THE NEED FOR A SUPPLY CHAIN RESET | 2023 20
  • 21. this reduces demand variability and complexity while better using market signals. Inventory The average manufacturing company carries thirty days more inventory than at the beginning of the 2007 recession. As inflation takes its toll on cash cycles and the levels of inventory increase, the Cost of Goods Sold (COGS) is increasing. Inventory is the most significant source of waste and the most important buffer for the supply chain. As variability increases, organizations experience tension in managing inventory trade-offs. The rise in inflation puts added pressure on decisions. Few companies are equal to the challenge. Caught in a system of dysfunctional metrics, inventory piles grow as teams push for manufacturing efficiency. The management of inventory is typically the responsibility of everyone, and as a result, it becomes no one’s responsibility. During the last decade, with a lower inflationary level, companies offset the increase in inventory by elongating payables to improve cash-to-cash. (Cash-to-cash= Days Receivable + Days of Inventory-Days Payable.) There was little impact on the Cost of Goods Sold. With the rise in inflation, this is no longer the case. Rise In Inventory Levels From 2004 to 2022, average global manufacturing inventories grew by thirty days. This is despite the increase in supply chain planning and Enterprise Resource Planning (ERP) investment. There are three primary reasons for the increase: 1. Rise in Product Complexity. Increasing product complexity increases manufacturing cycle stock requirements (the time to cycle through a product line in manufacturing). 2. Shifts in Sourcing Cycles. The lead time cycle increases due to global sourcing, manufacturing, and distribution outsourcing increasing in-transit inventories. (Inventory on trucks, barges, containers, and third-party locations.) Leadtime variability over the last thirty-seven months acerbated the issues. 3. Increases in Demand Variability. As product complexity increased, product forecastability decreased, growing the need for safety stock. A company with a product portfolio with a long tail (low-volume products with high demand variability) requires more significant safety stock inventory levels. (Traditional approaches for demand planning as less effective as it becomes more difficult to forecast an item.) 21 THE NEED FOR A SUPPLY CHAIN RESET | 2023 21
  • 22. Steps to Take to Manage Inventory Educate the organization on the basics of inventory and stop using spreadsheets to make supply chain decisions. (Companies using only spreadsheet analysis on cost miss the impacts on the inventory of shifts like tax efficiency, outsourcing, or sourcing strategies.) Use scenario planning in network design optimization and what-if analysis in discrete- event simulation to set inventory levels for each form and function of inventory. Analyze the current health of inventories. As companies recover from the past months of disruption, warehouses worldwide are bloated with incorrect inventories. High levels of inventory decrease customer service reliability. (A full warehouse is inefficient, requiring more labor and sophisticated approaches for inventory management. As a result, order reliability drops as inventory levels rise.) Take the hit—write off slow and obsolete inventories. As you manage the write-offs, analyze the root cause of the inventory write-off as a learning exercise for the organization. Figure 11. Definition of Form and Function of Inventory Form Function Supplier owned inventory: raw materials In-transit inventories: Inventory that is on trucks, barges, and containers. The longer the trade-lanes and the slower the mode, the larger the requirements for in-transit inventory. Company owned inventory: raw materials Cycle Stock: In the planning of production, finished good production is cycled to ensure that the production lines are fully utilized. The average rotation between products on production lines in consumer packaged goods is three weeks. Work in process inventory Safety Stock: Inventory requirements to buffer demand and supply volatility. Finished goods at the company warehouse Seasonal Inventories: Inventories required to support seasonal builds. Finished goods in the channel Promoted Items: Inventories to support the promotional lift to support a promotion. 22 THE NEED FOR A SUPPLY CHAIN RESET | 2023 22
  • 23. As companies reflect on organizational learning from this period of unprecedented challenges, reflect on the following: Implement a Balanced Scorecard. Redefine metric and reward systems to improve organizational alignment. Use Channel and Supplier Data. The direct use of channel and supplier data reduces latency and minimizes the bullwhip impact. Redefine systems to work outside-in and measure the bullwhip impact of the shifts in approach. Redefine Work. As companies moved from regional to multi- national, to global supply chains, the processes of a regional supply chain were adopted. As a result, many companies have teams of hundreds of planners that are not very effective. Use new forms of analytics to redefine planners as orchestrators. Use proactive optimization and cognitive learning to drive insights to business users based on market data. Define Governance. In our work, we find that successful companies are clear on governance. In this evolution, companies define how to use technology to make better decisions. This includes: • Who should make what decision at what time period. • What is a good decision? • How do divisional, corporate and regional teams best work together to improve decisions processes. • After- action review to analyze effectiveness. Improve Alignment. Use scenario planning—network design, what-if optimization, and discrete-event simulation—to test and discover alternatives while producing a feasible plan. Alignment is more straightforward when teams can visualize options. Test and Learn Through Innovation. Build an innovation budget and work with leaders to test and learn through new forms of analytics. To maximize the value of innovation, create a test-and-learn culture. A significant factor in the test and learn culture is falling forward and learning through failure. Relax the fixed Return on Investment (ROI) requirement to accomplish this goal and invest in training teams. Challenge Existing Paradigms. Assess the performance of the organization through this period of disruption. Ask these questions: • What happened? • When did we know it? • What should we have known when? • Was there data available in the organization that should have been used? • Use this insight to challenge existing paradigms. Reduce Process Latency. Analyze how long it takes the organization to make a decision and the effectiveness of the process. Streamline processes based on market data and clearly define what a good decision looks like. Implement after- action review analysis for key processes like SOP, allocation, and new product launch. Recommendations 23 THE NEED FOR A SUPPLY CHAIN RESET | 2023 23
  • 24. No company was ready for the level of supply chain disruption experienced during the past thirty-six months. It is an opportunity to redefine the “seat” at the table in the boardroom on supply chain performance. The supply chain reset’s starting point clearly defines supply chain excellence and driving alignment. Sidestep shiny objects and vague programs on digital transformation and focus on value. Summary 24 THE NEED FOR A SUPPLY CHAIN RESET | 2023 24
  • 26. This study was tendered in the summer/fall of 2022 to understand the current state of the supply chain at the end of the pandemic disruption phase. Respondents were sourced from LinkedIn connections and collaboration with the University of Wisconsin E-Business Forum. The study closed with sixty-seven responses (40% from process-based and 50% from discrete industries). For insight, reference Figure A. Appendix PROCESS (NET) DISCRETE (NET) Food and Beverage Industrial Manufacturing Consumer Packaged Goods Automotive Pharmaceuticals / Bio Technology Medical Devices Chemical - Industrial Heavy Equipment Chemical - Specialty High-tech and Electronics Consumer Durables Footwear and Accessories Furniture Other (please specify) 52% 33% 24% 9% 12% 6% 12% 3% 3% 3% 3% 3% 3% 3% 15% 3% Source: Supply Chain Insights LLC, Redefining The Supply Chain Response Study Base: Users (n=67) Q3. Which industry grouping best defines your company? Figure A. Respondents by Industry 26 THE NEED FOR A SUPPLY CHAIN RESET | 2023 26
  • 27. About Supply Chain Insights About Lora Cecere Lora Cecere (twitter ID @lcecere) is the Founder of Supply Chain Insights LLC, and is the author of the popular enterprise software blog Supply Chain Shaman. She also writes as a LinkedIn Influencer and a contributor to Forbes. She has written twelve books. Writing for the early technology adopter, Lora’s goal is to help business leaders. With over twenty years as a business leader managing supply chain teams for large Consumer Goods companies, fifteen years building planning software, and twenty years as a research analyst (AMR Research, Altimeter Group, and Gartner Group) and now as the Founder of Supply Chain Insights, Lora is an unquestioned thought leader working hard to unveil new trends and insights. Founded in February 2012 by Lora Cecere, Supply Chain Insights LLC’s goal is to deliver independent, actionable, and objective advice for supply chain leaders. With ongoing research using the over 330,000 followers on LinkedIn, the goal is to publish actionable insights to help leaders understand supply chain trends, evolving technologies, and which metrics matter. 27 THE NEED FOR A SUPPLY CHAIN RESET | 2023 27