3 Things Keeping Supply Chain Leaders Up at Night
Supply chain leaders continue to get increased exposure to C-level executives and Board members. This is due to the outstanding performance of supply chain teams over the past challenging years combined with a global spotlight on the critical role of supply chain management, which is making front page news everywhere. Some of the most common questions supply chain leaders are being asked inside the C-suite include:
- How do we build sustainability into our supply chain decision-making process?
- How do we monitor all the relevant aspects of our sourcing to identify critical bottlenecks, such as parts of our supply chain that are sole sourced?
- How do we add flexibility into our supply chain that allows us to shift quickly when geopolitical or weather-related or other unexpected challenges emerge?
Are sustainability initiatives at odds with profitability and resilience, or is there a way to balance all three?
For decades supply chains have been designed with a primary focus on cost efficiency. However, as the role of environmental, social, and governance (ESG) rises in the corporate agenda, supply chain leaders are increasingly looking for ways to make their supply chains more sustainable. In addition, ongoing disruptions are forcing organizations to become more resilient and agile.
Coupa recently held an invitation-only small group discussion with supply chain leaders focused on purpose-driven supply chains to address these issues. I hosted the session with representatives from Bain & Company and Cisco participating along with a number of Coupa customers and prospects.
Based on the discussion, here’s a list of three things keeping supply chain leaders up at night, along with some quick tips and relevant links that provide more details and solutions:
1. Designing a more resilient supply chain
As organizations strive to make their supply chains more resilient, building optionality with a continued focus on profitability is proving to be critical. For example, leading organizations are now developing options for nodes of the supply chain — including suppliers, production facilities, and distribution centers — as well as modes of transportation and flow paths into the market.
Keys to increase resiliency
|Build optionality into your supply chain to build resilience.||Build redundancy with dual footprint manufacturing and dual sourcing.||Acquire the tools and skills needed to spring back from unexpected events.|
2. Building a sustainable supply chain
Changes in the global regulatory environment, such as Germany’s recent Act on Due Diligence Obligations for the Prevention of Human Rights Violations in Supply Chains, and the rise of sovereign supply chains, along with increased pressure from consumers and shareholders alike, are making ESG top of mind. The first key is to focus on greenhouse gas reduction through science-based targets. What will it take within your sector for you to do your part to attain science-based targets?
Keys to reduce supply chain emissions
|Understand the baseline, which requires granular data from global sources.||Find your biggest opportunities by leveraging carbon footprint optimization.||Develop tools and processes to monitor, measure, and report on results.|
3. Scenario planning for crisis events
Scenario planning can happen within a Center of Excellence (COE), where a cross-functional team works together, collaboratively developing agreed-upon tactics and strategies for a variety of potential crisis events. This enables quicker responses and broader company-wide alignment when crisis events begin.
Keys to preparing for crisis events
|Collaborate cross functionally to craft detailed and agreed-upon plans of action for numerous potential crisis event scenarios.||Work with your government affairs team to understand the implications of new government policy on the supply chain.||Review potential internal failures such as quality failures and single sourcing, as well as external factors like weather disruptions, and demand changes.||Conduct business continuity planning exercises by stress testing your supply chain to a variety of simulated disruptions.|
The key to accomplishing the dual objectives of profit and purpose requires very tight collaboration and alignment between procurement and supply chain teams. Working together to manage supplier relationships and risk — and actively designing supply chain networks to explicitly factor in these objectives — enables supply chain leaders to get a restful night’s sleep.