![]() Other companies are building their labor pipeline-management capabilities-from recruiting through retention-and sharpening their labor planning as well. ![]() One food distributor created regional floating labor pools of drivers, warehouse workers, and supervisors, recruiting staff in areas where they were more available and deploying them wherever they were most needed. Tackling those shortages has forced companies to be creative in their hiring and staffing strategy. In 2021, for example, many companies in North America were affected by labor shortages across their supply chain operations. Which suppliers, processes, or facilities present potential single points of failure in the supply chain? Which critical inputs are at risk from shortages or price volatility? The first step in mitigating that risk is a clear understanding of the organization’s supply chain vulnerabilities. Supply chain risk manifests at the intersection of vulnerability and exposure to unforeseen events (Exhibit 2). Over the same period, major competitors suffered much more significant drops in sales. By rerouting inventory from in-store to digital-sales channels and acting early to minimize excess inventory buildup across its network, the company was able to limit sales declines in the region to just 5 percent. The company also used predictive-demand analytics to minimize the impact of store closures across China. When another major earthquake hit Japan in April 2016, Toyota was able to resume production after only two weeks.ĭuring the pandemic’s early stages, sportswear maker Nike accelerated a supply chain technology program that used radio frequency identification (RFID) technology to track products flowing through outsourced manufacturing operations. But the carmaker revamped its production strategy, regionalized supply chains, and addressed supplier vulnerabilities. In 2011, Toyota suffered six months of reduced production following theĭevastating Tohoku earthquake and tsunami. Historical data also show that these costs are not inevitable. In the consumer goods sector, for example, the financial fallout of these disruptions over a decade is likely to equal 30 percent of one year’s EBITDA. Prepandemic research by the McKinsey Global Institute found that, on average, companies experience a disruption of one to two months Supply chains have always been vulnerable to disruption. The third, sustainability, recognizes the key role that supply chains will play in the transition to a clean and socially just economy (Exhibit 1). The second, agility, will equip companies with theĪbility to meet rapidly evolving, and increasingly volatile, customer and consumer needs. The first of these new priorities, resilience, addresses the challenges that have made supply chain a widespread topic of conversation. and redesigning their supply chains accordingly. Position: they have the attention of top management and a mandate to make real change.įorward-thinking chief supply chain officers (CSCOs) now have a once-in-a-generation opportunity to future-proof their supply chains.Īnd they can do that by recognizing the three new priorities alongside the function’s traditional objectives of cost/capital, quality, and service 1 Employee safety, food safety, and employee retention are considered operational preconditions, not supply chain objectives. Supply chain leaders now find themselves in an unfamiliar ![]() They have also made heroes of the teams that keep products flowing in a complex, uncertain, and fast-changing environment. The COVID-19 crisis, postpandemic economic effects, and the ongoing conflict in Ukraine have exposed the vulnerabilities of today’s global supply chains. The plumbing of globalĬommerce has rarely been a topic of much discussion in newsrooms or boardrooms, but the past two years have pushed the subject to the top
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