Achieving the Right Balance & Leveraging on Defensive Strategies – LogiSYM September/October 2017

The issue is not the inability of businesses to meet the challenges, but rather about understanding the dimensions of risk and exposure that business strategies can create.

It is the dream of most companies to achieve great business success through their highly enabled supply chain strategies. Well defined supply chains with clear focus and adequately resourced enablers are important to attain leadership in achieving the business vision. Today supply chains are expected to deliver the best results despite the many challenges and variable conditions that face global enterprises.

No matter how complex the business strategy maybe, it is usually clear and logical in its design. But the higher the complexity, the greater will be the difficult in the execution. The challenges of dealing with unforeseen variables and the expected deliverables with short time horizons, is the real challenge of managing dynamic supply chains. Business leaders define their key priorities that enable them to effectively compete within their market sector. To achieve a sector or market leadership also means developing differentiators between them and their competitors. A strategy of differentiation, whilst creating real competitive advantages, necessary to gain market share, can also create risks and vulnerabilities for an Enterprise.

It is precisely because differentiators are specific to individual companies that the risks and vulnerabilities emerge. The related contributing disruptors are unique to such supply chain characteristics which reflect the business needs. The issue is not the inability to meet the challenges. But it is about understanding the dimensions of risk and exposure that business strategies can create. Even a well de ned supply chain model could have limitations in digesting such challenges. By virtue of executing such a uniqueness, is where risks need to be identified. And here is where the relevant defensive strategies need to be deployed to achieve the right balance between performance goals and resilience to vulnerabilities.

Supply chain models are well recognised as being the “life blood” of any organisation

Figure 1

The competitive advantage is derived from the execution of the key business strategies. The sustainability and balance of the supply chain is the resilience of the model in the way risks and exposures are managed. It is, therefore, not by chance that the risks and vulnerabilities have to be managed with focused defensive strategies. These may be quite different to the normal operational strategies that are managed on a daily basis.

Developing defensive strategies to mitigate vulnerabilities and sustain resilience, whilst maintaining a competitive edge in a dynamic landscape, is not a trivial task.

The most crucial point is to understand what exactly is it that we are trying defend against?”

This is a very effective tool that highlights and identifies the critical risks and vulnerabilities in the supply chain. This is illustrated in figure 2 (highlights in salmon colour). Such a collaborative approach not only addresses the problem in a direct manner but also eliminates internal process collisions and conflicts. The Business Process Mapping methodology, considers all the enterprises functions and processes – this includes the internal as well as the external.

Figure 2

Risks and Vulnerabilities can emerge from both internal and external sources. The model will include 3rd party suppliers, outsourced services and outside locations that support internal functions like proximity Hubs & logistics support. Identifying alone is not enough, there needs to be continuous review, updates of process mapping and updates of mitigation plans (defensive strategies) to effectively achieve the right balance.

A supply chain driven organisation establishes the platform that links and integrates many business functions and people in the organisation. This has a powerful effect to create a more coherent and aligned operating structure that optimises resources and delivers better performance. But this does not happen by itself, there needs to be strong leadership, competency and collaboration to drive and sustain this business platform.

Joe Lombardo
Founder of ESP Consult

Joe Lombardo has advised CEOs on change management through a supply chain focus.
The need for change is a very likely and necessary step for their business development and sustainability. However, starting a journey of transformation within their organisation can be hugely daunting. This introduction to a transformational journey illustrates that it is not as complicated or as expensive as it may seem. But the rewards and benefits will be significant. ESP Consult advises on structuring the model to facilitate and successfully implement Adaptive Supply Chain driven organisation. For those involved, it has been an enlightening and motivating experience.