1、NOWNEXTCOVID-19: What to Do Now, What to Do Next Rapid Response A pragmatic approach to maintaining supply chain resilience in times of uncertainty Navigating the human and business impact of COVID-19 March 2020 Most supply chains are underprepared of companies surveyed do not have a business operat
2、ions contingency plan in case the outbreak lasts longer than a few weeks3 HOWdo we recognize the most critical impacts to our customers, people and business? HOW does our action plan account for the characteristics of our supply chain? WHATdata and analytics are required to measure and inform the in
3、sights to our action plan? WHATneeds to change in my operations to ensure ongoing agility and resilience? WHATis needed to rapidly and effectively mobilize my organization? Coronavirus risks are overwhelming the virtual lifeline to humanity. The scale of the impact on supply chains eclipses anything
4、 most companies have anticipated. Global epidemics like COVID-19 ranked low as a focus for risk mitigation efforts, per a survey of supply chain leaders.1 For low-probability, high-impact “black swan” events like a global pandemic2, standard risk models fall short. As a result, most companies do not
5、 have contingency plans in place, leaving supply chain executives scrambling to respond. 71% 2RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty The impact on the value chain is significant SuppliersManufacturingLogisticsSalesPeople Factories in quara
6、ntine, production plants totally shutdown. Production challenges due to lack of raw materials availability. Quarantine measures cause labor shortages and temporary unemployment. Workers preferring to stay/work from home or in quarantine and those in service industries unable to do so. Concerns over
7、peoples health causing a reduction in productivity. Significant challenges in distributing supplies, e.g. quarantine and trade restrictions. Consumers concerned with traceability and source country of products. Consumers shifting demand away from stores to online and prioritizing need vs. want purch
8、ases. Stores are closed or have shortened hours, with mass inventory depletion due to panic purchases. Examples of challenges across the value chain: Global value chains are being severely impacted along all dimensions. Built for efficiency, todays supply chains cannot be easily switched to a state
9、of effectiveness and responsiveness, especially in a time of stress where customer and product segmentations are changing so rapidly. And the biggest challenges may be yet to come. Travel restrictions including airports, roads, trains and ports. Extra time for potential special screening and cleanin
10、g of shipments. Market closures. Carriers suffering shortage of drivers / driver man-hour restrictions. 3RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty Different supply chains, different impacts To address the effects of disruption such as COVID-1
11、9, companies must recognize the unique characteristics and capabilities of each component within their supply chain to optimize holistically. NetworkSuppliers FacilitiesWorkforceEquipment Partnerships DataSystemsTechnologies Further, companies must understand the distinct relationships between these
12、 supply chain components and the characteristics of the products and services they provide to address the complexity in their portfolio. Finally, companies must consider the relationship between these products and services and their customers to serve the broad array of unique needs. AND SERVICES CO
13、MPONENTS CUSTOMERS DiscreteLabor Intense ConsumableRegulatedPerishable Bulk / Liquid SegmentsMarkets DemandCritical NeedsProfiles Channels PRODUCTS Supply chains differ across industries and companies. But they also differ within companies, where supply chains are made up of multiple threads, each d
14、efined by its unique product portfolio and fulfillment network. Segmenting by these archetypes is a vital step in addressing disruption. 4RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty WITHIN 72-HOURS Establish command center and begin rapid respo
15、nse deployment WITHIN 1-WEEK Rapidly adjust operations and continue response cycle WITHIN 2-WEEKS Assess current operations and initial recommendations Establish an ongoing operating capability WITHIN 4-WEEKS GOING FORWARD Conduct first scenario modeling of priority risks / scope, and make decisions
16、 and recommendations Establish turn-key cross-functional command center, leveraging elastic digital workplace and daily stand-ups Execute top-priority actions based on predefined protocols Establish goals of scenario outcomes; expand scenario- modeling based on priority risk analysis and make recomm
17、endations Publish dynamic rapid response KPI dashboard for end-to-end visibility Identify data elements of supply chain threads to extract for scenario planning Continue expanding scenario modeling analyses, quantify risk impacts and make recommendations Customize response protocols and initiate exe
18、cution Re-assess and re-prioritize risks, adapting the response protocols based on execution feedback Evaluate impacts on the ecosystem (plants, suppliers, employees, partners, etc.) Identify how to embed resilience in existing supply chain network Establish a scenario planning environment that is a
19、 side car to the transaction layer Complete stand-up of operational command center Continue actively executing, monitoring, and adjusting protocols Automate updates and visualization of risk mitigation and value impact resulting from actions taken Update business continuity plan considering future c
20、apabilities across people, technology and processes Identify and quantify potential risks due to single- source of failure (site use the insights to drive development of alternative courses of action Customize risk / disruption protocols: leveraging an initial library of disruptions, tailor response
21、s and end-to-end protocols to the specific event (e.g. move inventory from China to other regions, reconfigure forecasting based on demand shrinkage / supply unavailability, flexible work models) Define value chain KPIs: identify the priority strategic and operational KPIs affected by protocols whic
22、h will need to be monitored (e.g. total delivered cost including the end-to-end costs to deliver a product or services, pace of adoption and change management) and their impact on the P develop protocol dashboard NEXT Embed resilience into existing operating model: adjust policies, protocols, playbo
23、oks, what-if scenarios and modify talent strategy to account for risk mitigation Manage extended impacts: address continuing impacts post-event (e.g. managing the ramp up in demand and supply, balancing inventory) Define suite of risk KPIs / performance metrics: provideholistic view of financial and
24、 operational KPIs integrated with protocol results Utilize intelligent capabilities: leverage machine learning to automate decision-making 12RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty Path to resilience Owing to rapid shifts in consumer demand
25、 across an expansive product portfolio, a Consumer Foods Company faced challenges with responding to the manufacturing network distributors. This was further challenged with legacy systems, cumbersome data management and increasing product and market complexity. We worked with them to improve agilit
26、y across its product lifecycle management capabilities. As part of its SAP implementation, the company was able to quickly leverage the new processes and digital platforms flexibility to adapt and simplify material sourcing, product development and total time-to-market. Relevance to COVID-19 COVID-1
27、9 is creating unprecedented shifts in global customer demand (by volume and by mix). Product management requires enhanced capabilities to sense shifts in demand and respond by rapidly adjusting their product portfolio and maintain product availability during demand spikes due to the epidemic Operate
28、 with agility NOW Establish operations team: establish a cross-functional team to execute the protocol and define clear lines of communication from the command center so that decisions are executed immediately and accurately Adjust to protocol execution: ensure business continuity and recognize empl
29、oyee concerns during the disruption by adapting to impacts from protocol execution Capture, evaluate and learn from results: define integrated dashboards to monitor the results of the protocol execution, use reinforcement learning techniques to improve decision-making, and alert the command center w
30、hen additional protocols may be required NEXT Expand / establish supply chain platform(s) and analytics capabilities: shift to or strengthen integrating business planning on a digital core platform; scale analytics or consider analytics-as-a- service Adopt workforce resilience: integrate agile ways
31、of working into the operating model Automate decision-making: leverage machine learning and cognitive capabilities to automate decision considerations and execution Build in anticipation: embed predictive analytics into the decision making to identify and react to issues before they arise Automate p
32、rotocol execution: automate actions and protocols once their effectiveness is proven and confirmed using intelligent automation (e.g. machine learning, RPA) Amplify Command Center learnings and capabilities developed: scale learnings through the business and harmonize protocols and analytics capabil
33、ities with business systems Path to resilience Despite being a recognized industry leader in health, safety and environmental practices, a Resources Company was experiencing a sudden increase in safety-related incidents in multiple facilities putting the well-being of their employees at high risk an
34、d potentially impacting their ability to serve customers. We helped by creating advanced end-to-end operations models using Prime Value Chain Analysis to accurately depict the way work was performed exposing operational complexity not adequately addressed by the health and safety assurance program.
35、By overlaying the operations models with data from the employees safety incidents and key elements of their health and safety assurance program, we helped the company understand the relationships between incidents, policies, training, and operations monitoring. Relevance to COVID-19 Complex supply c
36、hain operations can introduce countless factors with the potential of affecting the well-being of workers. To address potential risks, advanced visualization modeling and analytics linked to policies, practices and the employee experience can surface root causes and support development of required i
37、nterventions. How we can help: stand-up a response control tower, leverage intelligent automation for response execution and/or provide managed service to execute, track and adjust the protocols or perform analytics 13RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in tim
38、es of uncertainty Control Tower (intelligence, transparency, alerts management, data cleansing and harmonization) Simulation / scenario modelling Applied analytics (social listening, text mining, artificial intelligence derived by machine learning) End-to-end value chain transparency & analytics Op
39、model design & workforce planning Change management and communications (brand, purpose, strategy, services) EffectiveRapid Response requires key fit-for-purpose capabilities non-exhaustive Supply chain managed services SENSEANALYZECONFIGUREMOBILIZEOPERATE Optimization (physical network, labor planni
40、ng, product flow, inventory positioning) Risk analyzer Intelligence (spanning demand prediction, suppliers and capital operations) Process digital twin Intelligent automation (robotic process automation) Data integration (data harmonization & data quality from different data sources) Business System
41、s (analytics, extracting insights, developing plans, executing transactions) Command center (design, capabilities and playbook) 14RAPID RESPONSE: A pragmatic approach to maintaining supply chain resilience in times of uncertainty Creating Client Resilience amid COVID-19 Large European retailer: Afte
42、r closing all department stores across the region and a sudden shift to e-commerce, we established a rapid recovery nerve center. Also, in collaboration with the CPO, COO and CFO we created a value case and plan for releasing $400M of OPEX. Pharmaceuticals: To help address an anticipated demand surg
43、e in procurement operations, we are helping this company identify an approach to supporting their command center and response activities. Global retailer: Facing a shutdown of their fast fashion retail outlets, this company turned to us for an approach to help ensure that online demand could be fulf
44、illed from their warehouses. Additionally, we are helping with plans, processes and capabilities to improve near term and longer term operations agility. Personal Hygiene products: To help this manufacturer address the current surge in demand for personal hygiene products, we are helping the company
45、 shape an approach to achieving real-time visibility and tracking of incidences/actions through the formation of a logistics command center and control tower. Agricultural products company: Facing significant logistics constraints, materials shortages and labor limitations, we are helping this compa
46、ny consider an approach to design and implement a supply chain control tower to increase visibility, identify risks and execute mitigation plans. Telco Services provider: As this company prepares to launch a new service in which quarantined COVID-19 patients can be monitored virtually, we are helpin
47、g develop an holistic approach for project management, establishing hubs for distance monitoring as well the secure data analysis. Solar Power manufacturer: Facing inventory challenges, warehousing costs and uncertainty in global and inland transportation routes we are discussing approaches to devel
48、op a logistics control tower to identify risks related to logistics restrictions and provide insight for planning and production. Consumer goods company: To address challenges in demand visibility of the e-commerce channel, manual scenario planning and lack of cross- functional communications and al
49、ignment we are building end-to-end supply chain visibility assets, dashboards as well as evaluating a suite of analytics tools to improve segmentation, demand sensing and scenario planning. Automotive Components manufacturer: Our initial project focused on inventory reduction to free up capital and fuel growth. Given the current crisis our work has shifted to identifying an approach to improve inventory visibility, development of an analytics capability, raw material supply management and planning solutions for work in-progress and finished goods invento
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