At Deloitte, we have established a Supply Chain Panel – a group of experienced supply chain leaders and practitioners from a variety of industries. This December, we asked them about their most pressing supply chain priority in 2023. The answer: Resilience.
It’s no secret that the many black swan events of 2020, 2021 and 2022 have highlighted the vulnerable nature of many global supply chains. Spurred by disruptive events (pandemic, geopolitical dynamics, transportation capacity constraints, labour shortage, war, inflation and the energy crisis), many companies have worked hard to reconfigure and refine their overall supply chain strategy by taking a more holistic view of risks and resilience – and by implementing sound processes for Integrated Business Planning (IBP).
Working with supply chain transformation every day with our Danish and Nordic clients, we decided this autumn to establish a Supply Chain Panel at Deloitte, comprising of experienced supply chain leaders and practitioners from many different industries. What all of them have in common is their capacity to give perspectives on recent developments – and to share their plans and priorities going forward.
How can Integrated Business Planning (IBP) help drive resilience
Before looking at the results from our first panel survey, let’s quickly look at the concept of resilience, which can be defined as the ability to mitigate and/or bounce back from unforeseen events. A resilient supply chain balances risk and costs to prevent or recover quickly from a multitude of dynamic and simultaneous risk-related disruptions.
IBP can be a significant boost for resilience, given that it’s a collaborative process where tactical plans across portfolio, customers, production- (or service-) resources are aligned and calibrated against business targets.
At the same time, risk and opportunities are identified and evaluated in scenarios, providing the executive team with a transparent overview of the company’s situation and thus the opportunity to make the appropriate decisions to keep the company on track and aligned with strategic goals.
For example, the monthly IBP drumbeat process governs transparent collaboration across the internal and external supply chain. Each functional meeting in the drumbeat contributes risk & ops that could significantly impact business targets in the 6-24 months horizon. And the cross-functional reconciliation meeting handles the identified risks & ops and builds scenarios with alternatives and Plan B’s for the different risks, which then subject to criticality and likelihood can be decided in the executive management meeting and put into motion – just to name a few examples.
The four pillars of resilience
Seeing the broader picture, Integrated Business Planning is a significant element of what we would normally define as the “four pillars of resilience:”
- Visibility: The ability to track and monitor supply chain events and patterns, enabling proactive actions, for example improving insights into the supplier landscape and customer demand trends, and embedding risk management in the end-to-end supply chain, typically through a control tower concept.
- Flexibility: The ability to quickly adapt to disruptions without significantly increasing operational costs, for example shifting from single to dual/multi-sourcing, increasing inventory and capacity buffers, increasing use of local suppliers, and outsourcing operations that are not core capability.
- Collaboration: The ability to develop symbiotic and trust-based relationships cross functionally, as well as with supply chain partners and strategic networks
- Control: The ability to implement and execute policies and processes that increase control of the supply chain, as well as expanding the span of control in the end-to-end supply chain
An overwhelming focus on resilience
Going back to our new Deloitte Supply Chain Panel, this December we asked members about their top priorities in 2023. Here are some of the most significant results:
- Overall, 3 of 4 respondents agree or strongly agree that supply chain resilience is a top priority in their organisation.
- Increased cross-functional collaboration in the organisation (the core element of IBP) is seen as the number one enabler of supply chain resilience, followed by digitization to enable transparency and automation.
- Other significant enablers of resilience include better demand planning and forecasting, increased collaboration with supply chain partners, dual & multi sourcing, increased capacity buffers as well as increased standardisation of operations.
You can download the survey report here if you want to know more
In 2023, companies will undoubtedly continue their journeys towards building resilience – and for many, Integrated Business Planning (by which the entire organisation is connected behind one optimised plan) will be a cornerstone of those efforts.
How to get started? Well, no resilient supply chain looks to same – but the considerations to get there are typically similar: A vision, strategic objectives and priorities, and a strategy for supply resilience needs to be in place as a baseline before the capabilities needed can be identified and an operating model can be designed.
And then there’s the tactical implementation, which is a whole chapter in itself. We’ll talk a lot more about that in 2023.
