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Resilient supply chain: Delivering consistency and quality
Articles- Mar 13,24
In this second article of the 3-part series, R Jayaraman explains why integrated supply chain is a must to deliver consistent and high-quality goods and services.
In Part I, we introduced the concept of the ISC – Integrated Supply Chain. To recapitulate, the ISC diagram is reproduced in Figure 1.
The main theme developed was that: to create resilient supply chains, one needs to take an integrated view, and not merely attend to the strengthening of the back end of the ISC. Let us expand on this theme further, and understand how this view is necessary to keep supply chains delivering consistent and high-quality goods and services.
To begin with, let us look at an example of an ISC. An MBA school is a good starting point. The B School uses academic knowledge, industrial experience accumulated in its educational instructors and support staff, to deliver knowledge and skills to MBA students, who then are employed by companies. Based on the feedback given by companies, the academic and other inputs are tweaked continuously, to keep the delivery contents current and futuristic.
The ISC for such a school will look as shown in Figure 2.
To keep up the public profile of the school (as conveyed by its ranking) and to keep delivering value to its ‘customers’ (companies), the school needs to keep the delivered contents on top of the heap. When Covid disrupted its working, the school identified new initiatives in the front end – online teaching, online courses, online classes, software driven education ‘at one’s convenience’, etc.
In terms of the ‘central value creating’ box, the school allowed all its staff and educators to work from home. And, in a hybrid mode too. Interviews with potential employers were held online. Zoom, Google Meets etc. became the new facilitating instruments of delivering knowledge and skills. In this case, the back-end, the traditional ‘supply chain’ had not been affected much. The resilience has been created mainly through interventions in the front-end and the central boxes. There are several features of this ‘tectonic’ change in education, which happened without much of a fuss, but is still working itself out. Efforts are being made to get students back to the school, but, ‘online’ is here to stay, it is a positive spinoff of the covid disruption.
This example shows that to create resilience, one needs to look at all the three boxes, and not merely the back-end box. This is the integrated view. How did the back-end respond to this new business environment? There have been significant changes in the back-end as well. Academic journals are now getting into ‘online’ publishing, paid publishing online, which processes are reducing the submission – publication cycle times drastically. Thus, responsiveness of all the three boxes is necessary for a successful ‘resilience’ effort. The question is, how resilient is the new configuration of the school’s business model?
With the evolution of the concepts like ‘lifetime learning’, ‘learn at one’s convenience’, ‘packaged learning’, ‘individual learning’, the B School ISC will see many more changes, but, due to the tight integration of the three boxes in the ISC, one could expect the next levels of evolutionary steps to happen smoothly. The integrated approach means changes need to be made to each of the boxes, new capabilities built into them. For example, professors and teaching as well as non-teaching staff had to be trained in handling online courses, conducting online examinations, and make several other adjustments. These activities can be categorized into functional streams where new expertise needs to be developed. It could even call for new organisational design, introduction of new positions, such as, ‘Chief of Online Education’.
This example illustrates the need to consider the ISC, rather than only the back-end box, to build resilient supply chains. There is a change in emphasis, change in scope, change in looking at the ‘problem’ and ‘solutions’. Clearly, the example also illustrates that the building of resilience is of importance to the whole business value chain, rather than to any one part of it.
Let us now proceed to understand the word resilience in all its dimensions.
Google responds with the following definitions of resilience:
- The capacity to recover quickly from difficulties;
- Toughness
- The ability of a substance or object to spring back into shape
- Elasticity: "nylon is excellent in wearability, abrasion resistance and resilience"
This definition does not fully convey the consistency part of resilience that businesses want. This definition is more in the nature of a problem solving, rather than a solution that yields dividends over a long period of time, addresses various possibilities, and has the ability to evolve with changing circumstances. To do all these, one needs to have a holistic definition of resilience. In the business context, one can define resilience as ‘that which creates a lasting solution to current and possible future developments which will seriously disturb the way business gets done’. This definition is what is sought by industry, and one which can take care of Covid as well as the developments like Industry 4.0.
As was stated earlier, resilience is an integration concept rather than a problem- solving concept. Let us illustrate once again with examples. Let us say that the back-end is disrupted, resulting in shortage of supplies of certain components and raw materials. Then, the instinctive response is to procure the same from elsewhere. This is OK as long as there are other suppliers. However, other responses possible are: produce some other products, procure substitute inputs for the same products, procure from stores to the extent possible by maintaining inventories.
For the first option, decisions need to be made in terms of finding appropriate substitute products to be produced, which has several implications, like informing the current customers of possible delays, informing others that their deliveries could be advanced, and so on. These activities can be done only if the concerned departments are fully connected and work in co-ordination. For the second option, other suppliers need to be informed of the urgent supply needs, and, for the third option, the company must work on well-designed inventory management principles and decision rules.
The difference is, to identify such suppliers, and, for this, the company’s design department should be assigned tasks. This is a new response, specifically to create resilience. The additional tasks will increase the work of the design department, as well as the materials department, who will have to identify suppliers for these substitute inputs. Such additional tasks will be positioned in departments in the central box. It is also possible that the product mix will be enhanced, with substitute products to be produced as and when required. In the front end, customers will have to be informed of such substitute products, and consent obtained. Since the customers will also like the possibility of continuous, uninterrupted supplies, they will also agree.
Similar examples can also be provided for the central box, which will lead to additional tasks in the back-end as well as in the front-end. Overall, it can be appreciated that the ISC view will lead to creation of genuine RSC rather than a patchwork, from-time-to-time approach. The non ISC view will lead to crisis management and seat-of-the-pants driving, with the concomitant inefficiencies and customer dissatisfaction, ultimately leading to loss of business. In the Part III, we will define the new ‘rules of engagement’ for creating ‘genuine’ RSC.
(This is the Second article of 3-Part series column)
About the author:
R Jayaraman is the Head, Capstone Projects, at Bhavan's S P Jain Institute of Management & Research (SPJIMR). He has worked in several capacities, including Tata Steel, for over 30 years. He has authored over 60 papers in academic and techno economic journals in India and abroad. Jayaraman is a qualified and trained Malcolm Baldrige and EFQM Business Model Lead Assessor.
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