Posted: 19 Aug. 2020 5 min.

Going from efficient to resilient supply chains

Topic: Supply Chain

There’s light ahead: Many of the companies I work with are already moving from efficiency to resilience when it comes to their global supply chain.

To tell you the truth, I was both somewhat anxious and excited to return to work after the summer holidays – anxious because we are clearly still in the midst of a national and international economic crisis following COVID-19, but also excited because I see so many of our clients at Deloitte now getting back on their feet, revising strategies and reconfiguring their business for the future. 

Actually, I am very humbled to be invited to some of those dialogues, both those that revolve around transformation of the entire business model, and those that are specifically targeted global supply chains.

Of course different companies have different operating models and different supply chains, but across all conversations one word seems to pop up constantly at the moment. That word is resilience – modstandskraft in Danish.

 

You may ask, is that different from before the pandemic? I would say yes. For many years, companies have primarily focused on efficiency in supply chains rather than resilience. We have all sought to make supply chains more lean, more specialized, more consolidated and with operational excellence as the number one goal. This has been a great exercise for many companies, paving the way for huge cost savings, product innovation and in many cases also opportunities for growth as companies have learned to navigate on the global markets.

However, as we have all seen, events that were once considered black swans – high impact, but low probability – now seem to be an almost regular occurrence. This is not necessarily because problems are happening more often, but because in a globally interconnected society and business environment, problems that used to remain isolated now have far-reaching impacts.

What all this adds up to are two things:

First, what many companies are doing right now is trying to get a more complete view of supply chain risks, especially those disruptive risks that might not be easy to spot. They involve macro environment risks, extended value chain risks among upstream and downstream supply chain partners, and also third party risk, including Tier 2 suppliers that may not previously have been part of the risk assessment.

Second, and on a broader level, I definitely see a shift from efficiency to resilience when it comes to supply chain. This means creating supply chains that are not only lean and fast-moving, but also agile, flexible, collaborative, network-focused and, most importantly, predictive in their ability to foresee disruptions and prescribe action.

The notion of resilience is of course not new; in fact, it is a characteristic many enterprises and supply chains have long aspired to possess. However, simply recognising the value of supply chain resilience as a concept is not enough. To build resilience, you have to understand the essential components and required trade-offs that are necessary, often requiring a huge leap forward in visibility, transparency, flexibility and robustness of processes.

Professionally, this is a challenge that I am happy to take on in collaboration with our many clients who are already planning the necessary adjustments. 

On a personal level, I am also happy to see how everyone’s approaching the huge tasks ahead with such purpose, passion and persistence. We might still be in process of understanding the full reach of the crisis, but what is evident to me is that people are working hard to find new solutions, not only in the short-term, but also for the future. 

Returning to that kind of mindset after the summer holidays makes my life so much more enjoyable with inspiring dialogues and new exciting projects all around. Thank you so much for that.

More about the author

Tore Christian Jensen

Tore Christian Jensen

Partner

As a part of the Strategy & Operations practice Tore has worked with analysis, development and implementation of operational strategies. Tore has deep experience with aligning business models to changing market demands through optimisation of business processes and aligning systems, organisation and governance accordingly. He has industry experience from manufacturing, transportation, consumer products and energy. His main focus is on on the operational core processes but he also covers administrative support processes. As a program manager Tore has been leading transformation projects for international clients heading multiple parallel projects and reporting directly to executive committee members. His responsibilities cover everything from initiating assessments, identifying opportunities for improvement to building business cases and following up by designing solutions and driving teams through implementation.