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Peaks in customer demand. An unforeseen shortage of raw materials. A failed harvest. But also global events with long-term consequences such as wars, sudden trade restrictions or blocked transit routes. These are all things that can suddenly drastically disrupt the flow in the operations and supply chain. These are challenges that are usually solved with ad-hoc responses, trickery and the temporary sticking of a band-aid here and there. But then more is needed. Because much more important is the question of how you ensure that you are structurally ahead of these types of incidents in the future. This focuses on the old adage 'prevention is better than cure'.
Fair's fair. Every time you manage to successfully deal with such an incident together, maintain production through extra efforts and customers remain satisfied, it gives you a good feeling. Together we succeeded again and so an extra portion of dopamine flows through the bodies. But of course you shouldn't get stuck in that reactive mode. Because that is unhealthy. For your company. And for the people who work there.
The biggest challenge is not solving the incident itself, but learning from it for the future. Making the step from reactive to proactive thinking and acting. Because if you repeatedly label disruptions in the operations and supply chain as an incident, you will continue to wander around in a game of mole. If you have just caught one mole, the next mole will appear again. And no one can keep that up. As a result, performance will deteriorate in the long term.
A number of things are necessary to actually make the step towards proactive thinking and action. First of all, it is important to make a careful analysis of what happened in each incident. Make a good 'root cause analysis' (RCA) with everyone involved. Take a break from everyday life for a while. Look back carefully. Not a week or a month, but preferably a whole year. What went wrong? Have there been similar incidents? What were the causes? What does it teach us? What can we do differently in the future to deal with these kinds of unexpected events? Sharing all information and new knowledge that emerges between departments and chain partners is also essential. After which it will become clear that almost every incident is ultimately a structurally solvable problem.
Based on a thorough analysis and coordination in the chain, you can come up with various scenarios, determine the strategy and make choices. How are we going to pre-sort and respond in advance to incidents like we experienced previously? Which scenarios are we preparing for? A good guideline for this is the 3S model: simplify, shorten and strengthen.
In the first step (simplify) you remove complexity from the chain, without losing the added value you offer your customer. For example, consider reducing the number of product or packaging variants and focusing on the real added value. Less variety in colors, flavors, services, you name it. Choices that simplify operations and supply chain. In the second step (shortening) you choose shorter lines. Literally, for example by purchasing raw materials closer to home. But also through shorter lines of communication with your customers and within the organization. With the third step (strengthen) you strengthen the chain at essential points. For example, by choosing more suppliers for strategic products and therefore spreading your purchasing. In some cases, by building up extra stocks just to be on the safe side. Or always keep capacity available on the production lines, so that you can effortlessly scale up your production where necessary. They are clear, solid choices based on your previous experiences and expected developments. This prevents moles from continuing to burrow into your organization and surprise you again and again.
Bastiaan Boers
Partner ARV Group
'Surprisingly, almost every incident is a structurally solvable problem.'