Gartner: Supply Chain Disruption Shaping Creates Competitive Advantages
July 20, 2021
supply chain officers (CSCOs) must strategically reduce the rate of
disruption to their supply chains by reducing their surface areas,
according to Gartner. Research by Gartner shows that disruption-shaping
organizations are likely to experience less than one-third of
disruptions than their peers.
Gartner defines supply chain surface areas as the sum of all the
products, processes and networks that compose the supply chain today and
represent touchpoints that risk events can have with the supply chain.
“CSCOs should reduce the surface areas of their supply chains by
simplifying processes, reducing movement within their supply chains, and
reducing the number of sites and suppliers that compose their networks,”
Suzie Petrusic, director research with the Gartner
Supply Chain practice. “With a higher cadence of risk event,
a smaller surface area is an asset, a large surface a major liability.
CSCOs can’t control how many risk events will happen, but they can
control the size of the target they want their organization to be.”
Many supply chains are easy to disrupt because they pose a large target.
They expanded over decades and dispersed risk across a global network,
while optimizing cost. Processes became more complex and required a lot
of movement of goods and material within the supply chain – a system
that is easy to disrupt.
Supply chain organizations that experience fewer disruptions today have
managed to control the surface areas of their supply chains by
constraining the number of touchpoints risk events can have with their
organization. This means fewer third-party logistics providers, shipping
modes and lanes as well as greater distances between suppliers,
factories, warehouses and distribution centers. Processes are being
redesigned and simplified.
“Disruption shapers balance exposure to the overall risk environment
with exposure to single catastrophic risk events. The goal is not
extreme consolidation but finding the right size for the organization at
any given point in time,” Petrusic added.
Disruption Shapers Embed Disruption Awareness into the Overall Supply
disruption shapers, reducing disruption is a part of the strategy
planning process, considered along with cost, quality and speed.
However, this does not mean abandoning the strategic business objectives
of past decades. Instead, CSCOs can redefine cost optimization by
including the cost of constant disruption in their calculations.
“A commitment to an optimal surface area does not mean that you can
never expand. It just means that CSCOs have to make intelligent design
choices that diversify the total risk,” Petrusic said. “They must
understand that the current environment will make it harder and harder
to deliver reliable and profitable service to customers, and they should
act now to experience less disruption later.”
Disruption Shaping Reduces Costs and Creates Competitive Advantages
Disruption-shaping organizations benefit in multiple ways. Their
approach reduces costs to the supply chain because the organization
experiences fewer disruptions overall. When a disruption happens, the
network is more likely to be prepared and recovery will take less time.
"The biggest benefit of this approach is the competitive advantage it
creates. Disruption shapers are ready and waiting to service the
customers that their closest competitors are losing because they are too
busy responding to risks," Petrusic concluded.
Bays, Vice President Product Development with Inmar Intelligence
said, "I believe disruption-shaped supply chains are somewhat
situational. Fewer touchpoints certainly reduce complexity – but it can
also restrict agility when events do occur. Borrowing from
ISO 31000 Risk Management protocols,
risk management begins with communication and consultation. Next is
establishing the context. This is where risks become situationally
based. For example, let us assume Car Company A owns its fleet of new
vehicle carriers – and due to the shortage of available computer chips –
the company plans to idle or reduce production in its plants
indefinitely. This leaves these hard assets stagnant until sales return
to their previous levels.
The secret to disruption-based supply chains is limiting it to the
company’s core line of business - in this case - manufacturing and
selling vehicles. The non-core functions should have near- frictionless
integration driven by technology that facilitates visibility and
incorporates prescriptive and predictive analytics."
Bob Bova, President and CEO of AccuSpeechMobile
added, "Gartner continues to get organizations to align themselves with
technologies that can optimize processes, use resources in the most
effective manner and define risks before they occur. AccuSpeechMobile
provides edge based voice automation that can minimize risk by voice
automating workflows. This type of automation accelerates work,
eliminates errors and assists in reducing the supply chain surface areas
for companies of all sizes. This compression of solutions will allow
companies like AccuSpeechMobile to thrive by providing multiple
applications with voice automation thereby reducing their supply chain