Published December 2, 2020
All things evolve. In business, evolution can take place gradually or abruptly. Gradual evolution occurs by improving the ways things are done. Abrupt evolution occurs by doing different things.
The supply chain profession has gone through many gradual evolutions but only two abrupt evolutions since the term began being used in the 1980s. The two abrupt evolutions took place because of changes in the objective of supply chains. In the 1980s, the objective of supply chains was clearly cost reduction. The goal was-by looking at all of the mega-processes of supply chain (Plan-Buy-Make-Move-Store-Sell)-to reduce the total cost of supplying the product to the consumer while meeting the customers’ requirements. Twenty years later in the year 2000, the objective of supply chains changed from cost reduction to profitable growth. This change created the first abrupt evolution in supply chains as awareness grew around the fact that supply chains impacted not only the costs of operations, but also the revenue of the business. By customizing products and services through the supply chains, organizations were able to achieve profitable growth by increasing both the top line and the bottom line.
Interestingly, it was again 20 years later in 2020 that organizations were hit with the VUCA-volatility, uncertainty, complexity and ambiguity-of COVD-19 that the resilience and agility of supply chains became critical along with profitable growth. The simple truth is in times of uncertainty of supply and demand, the most important objective of the supply chain is to synchronize supply to demand in such a way to maximize profitable growth. This second abrupt evolution in the objectives of supply chains beget a huge demand for organizations to upgrade their supply chain technology to enhance their organization’s supply chain resilience and agility. Organizations required supply chain technology that provides:
- End-to-end real-time supply chain visibility across the entire network
- Integrated planning and execution systems capable of addressing real-time changes in supply and demand
- An intelligent control tower that not only identifies problems but makes and executes decisions and provides analytics
This second abrupt change is just now being understood by many organizations that designed their supply chains before VUCA. A supply chain that was excellent at the beginning of 2020 is today, at the end of 2020, woefully inadequate to deal with the realities of current supply chain networks. This inadequacy of pre-COVID supply chains has resulted in a call to action for all organizations handling physical products to reinvent their supply chain technology to address resilience and agility. Unfortunately, many organizations have been so busy dealing with VUCA that they have yet to begin to address this call to action. If you would like to further grasp this second abrupt shift and understand the call to action, feel free to send me an email at jtompkins@tompkinsinc.com. I’ll be happy to share with you my view of how to address this second abrupt evolution of the objectives of supply chains.
