Our Guest Post comes from Polly Mitchell-Guthrie, VP of Industry Outreach and Thought Leadership at Kinaxis (at https://www.kinaxis.com/en)
Pop quiz: What disrupted supply chains more in 2020, supply or demand?
I posed this question at the start of the many virtual guest lectures I gave to classes in 2020 to illustrate that supply chains are not all the same, but that regardless agility was sure to be a key factor in response.
Some students chose demand, having experienced bare grocery shelves. Some answered supply, thinking of shutdowns in China. I shared stories from customers of the supply chain management software company where I work to illustrate the variation along with the common thread of agility.
Demand skyrocketed for some consumer packaged goods, but less obvious were spikes in other
industries. Biopharmaceutical company Ipsen didn’t anticipate demand shifts, since they make
specialty drugs for oncology, neurology, and rare diseases, but they experienced erratic
increases. A high-tech customer saw demand drop precipitously, but no one foresaw the move
to working from home, which then drove their demand through the roof. In contrast industries
like automotive, aerospace, and apparel saw demand disappear.
Most companies felt supply disruptions, from their own production shutdowns or their
suppliers. Lead times increased, some suppliers were temporarily (or permanently unavailable),
and sourcing new suppliers wasn’t easy. Distance made quality and cybersecurity harder to
manage. And some companies were whipsawed by both demand and supply.
The ability to anticipate disrupted demand, quickly substitute supply nodes, and readjust
balance was critical. Scenario planning usage took off as companies sought to rebalance by
making the best decisions for their entire supply chain, not just by the functional silos of
demand, supply, inventory, etc. Planning cycles shortened from weeks to days. Agility was
critical to survival, which is why agility is one of 3 reasons supply chains can’t afford to wait to invest in building this muscle now.