SUPPLY CHAIN MANAGEMENT
Figure 2 - Supply chain risk management view
choices need to be made . In this context , it is very important that you truly understand your value chain and define a business strategy that matches your supply chain capabilities . A detailed supply chain network model , representing your key value drivers in combination with an aligned target operating model will help you in achieving this . At this point , you define the decisions taken at different horizons and the KPIs that are measuring progress and performance . As supply chains evolve organically by a sequence of decisions , keeping track of potential deviations requires periodical assessment of your performance . The earlier defined key value drivers and KPIs will provide clarity in this exercise . Lastly , it is essential to think beyond short-term cost-cutting . Sustainability and global supply chain disruptions are likely to remain prevailing issues . In the long run , a sole focus on cost cutting will expose your supply chain vulnerabilities and inevitably lead to unanticipated and higher costs . On the contrary , a resilient supply chain will mitigate these risks .
Changing the chain
Is it economically viable to change your supply chain set-up ? Many companies ask themselves whether it is economically practicable to adjust the current supply chain system . At EyeOn , we believe this is economically feasible for several reasons . An optimised supply chain requires lower energy consumption in the value-adding process and results in a reduction in transportation costs . Next to scarcity of drivers , equipment and container shortages , energy costs are soaring . In view of ever-increasing energy expenditures , supply chain network redesign becomes a viable scenario . As a result , reshoring and nearshoring your supply becomes even more attractive . Moreover , upgrading your key assets for energy efficiency has the potential to result in a tangible economic benefit as well . As highlighted above , the focus on cost has turned many supply chains into a house of cards . Outsourcing , offshoring and just-in-time supply have decreased resilience . These require attention . What are the actions companies can take to resolve this problem ? Companies need to embed resilience into strategic supply chain development . A better insight into tested resilience can be achieved by developing a digital model of your supply chain . A so-called ‘ digital twin ’ provides you the ‘ sandbox ’ to validate
References : 1 : https :// blogs . gartner . com / power-of-the-profession-blog / hype-cycle-for-supply-chain-strategy-2021 any strategic scenario . It will aid you in the detection of unexpected impact or support you in seizing opportunities when they arise . At this point , it is worth mentioning that traditional supply chain network modelling methods focus on the probability and impact of potential incidents . By contrast , the EyeOn network modelling approach measures risk exposure and resilience by understanding time-tosurvive and time-to-recover aspects . This approach allows you to assess the impact of risks regardless of their cause or probability ( Figure 2 ).
Data-driven supply chain
To optimise your supply chain , the establishment of a data-driven culture is key . Why do we think this is important ? Stepping into the digitalisation journey requires you to embrace an established data-driven culture within your organisation . Proper data has the potential to support making the right decisions ( e . g . by performing scenario analysis ). Activating datadriven potentials for making better decisions stands in direct correlation with data availability - data is seen as the ‘ new gold ’. Even with extensive availability of data , be aware of analysis paralysis . Do not overthink every decision - the reality is uncertain , with a chance of being different from any prediction . Accept this uncertainty by performing scenario analysis . This will give you insights into scenarios , i . e . best , realistic or worst case , etc . Lastly , use a fit-for-purpose level of modelling , cascade down in the planning hierarchy only when details matter . •
Alexander Wenk
SENIOR BUSINESS CONSULTANT
EYEON BV k + 41 79 336 32 47 J alexander . wenk @ eyeon . eu j www . eyeonplanning . com
53