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The goal is still to reliably deliver products on time, to the customer’s complete satisfaction, at a highly competitive cost. But the approach is fundamentally different―melding planning and execution into a simultaneous process.
In short, the retail supply chain of tomorrow will not look like the supply chain of yesterday and today. But what will it look like? And how can you get there from where you are today?
The challenge in focus
Kearney, in collaboration with the World Economic Forum (WEF), developed a comprehensive new framework―The Resiliency Compass―to help companies understand and prepare for future disruptions. This research found that only 12 percent of companies are sufficiently prepared for global supply chain disruptions. To address this urgent need, we blended insights from more than 400 senior operations executives with Kearney’s own operations expertise to map a comprehensive path toward building resilient supply chains.
We can also offer the perfect place to start: Kearney’s Resilience Stress TestSM. Creating a resilient retail supply chain requires everyone―all of your business functions and your entire supplier ecosystem―to share a highly tangible vision of where you are going and what must be done to get there. You can best shape that vision by stress testing your supply chain to pinpoint your most critical vulnerabilities, as well as your most compelling strategic opportunities.
The Resilience Stress TestSM (RST), vetted in collaboration with both WEF and MIT, provides a detailed yet comprehensive picture of your current supply chain across eight dimensions (see figure 2).
Suketu Gandhi, partner in the Consumer and Retail and Digital practices, discusses Kearney’s Resilience Stress TestSM and how organizations can use this as a tool to focus, prioritize, and accelerate their resilience-building efforts.
Kearney conducts the stress test in concert with key members of your supply ecosystem, delving deep into the inner workings of your company to identify priority pain points and strategic opportunities. This in turn serves as a springboard for a rapid and sustained transformation.
Kearney works with you to:
Prioritize. You cannot transform your supply chain overnight. The stress test provides the objective insights you need to prioritize your efforts. Focusing first on the “low-hanging fruit” can reap benefits that help fund the larger transformation. In retail, such priorities may include sharing more accurate demand signals with suppliers to reduce overproduction and waste, and expanded use of location intelligence and IoT to streamline logistics and transportation.
Engage. Opportunity is the driving force for engaging diverse stakeholders in your efforts to create a resilient supply chain. Be real. People will become passionate about your efforts when you effectively answer the unspoken question: “What’s in it for me?”
Fortunately, when it comes to creating a resilient supply chain, you’ll have truly compelling answers, ranging from “For the first time, we will be in control of our true costs…” to “We will be far less vulnerable to supply disruptions…” to “We will be able to anticipate even subtle shifts in shopper preferences.”
Tailor your WIFM messages for each of the key stakeholders you want to actively engage in your supply chain transformation―including front-line operations, merchandising, finance omnichannel partners, and strategic suppliers.
Transform. The goal of the transformation is to create a sense and pivot supply chain, with three essential components:
- A sensing platform that identifies risks and generates insights from internal and external signals. This enables real-time tracking, market adaptability, and improved network visibility.
- A cognitive supply chain that provides end-to-end visibility and execution, powered by AI-based technologies. Organizations employ real-time simulation, seamless orchestration, and robust evaluations of cost, risk, and service trade-offs.
- A pivoting operating model that combines people and physical assets to create an agile and collaborative operating model. Companies can then create automation and transformation opportunities and experience financial and operational gains.
Vital means to those ends include cultivating a fundamentally new mindset, skillset, and toolset across the supply chain organization and beyond.
Adapt. Your transformation must be ongoing, adapting your supply chain strategy and structure to a continuously evolving operating environment.
Clearly, creating a resilient supply chain demands significant and sustained effort. But the benefits―preventing costly stock-outs, efficiently delivering personalization and assortment, and setting the pace in an omnichannel world―will deliver exponential returns.