What Makes a Supply Chain Resilient?

Summary

In this insightful discussion, Paul Webb, Regional Vice President of Enterprise Supply Chain at Cooper, delves into the concept of supply chain resilience amidst ongoing disruptions. He breaks down resilience into three key components: efficiency, flexibility, and responsiveness, emphasizing the importance of understanding and optimizing these elements for a robust supply chain. Webb also contrasts supply chain optimization systems with planning systems, highlighting the role of optimization in shaping long-term policies and the critical need for skilled labor in the face of a looming shortage. Looking ahead, he anticipates continued disruptions and a significant impact from labor shortages, suggesting that while AI can assist, it may not fully compensate for the gap. Cooper, a business management platform, is focused on integrating supply chain finance and procurement for a seamless flow, and is leveraging AI to help supply chain leaders make informed decisions and create a more efficient 'by Design' supply chain state.

Takeaways

• 📈 **Efficiency in Supply Chain**: Resilience is about structuring supply chains to be as efficient as possible, understanding the difference between by Design and Rogue shipments.
• 🎶 **Flexibility to Disruptions**: Being able to orchestrate and execute changes in the supply chain to respond to disruptions is a key component of resilience.
• 🔄 **Responsiveness to Decisions**: The speed at which decisions are made and executed during disruptions is critical to resilience.
• 📊 **Supply Chain Planning vs. Optimization**: Planning systems are for shorter-term control, while optimization systems are for longer-term supply chain design and policy creation.
• 💡 **ERP Systems**: ERP systems provide a record of activity for accounting and other purposes, which is different from planning and optimization systems.
• ⚙️ **Output of Optimization Systems**: The end result of a supply chain optimization system is a set of policies regarding inventory, transportation, product flow, and sourcing.
• 🌐 **Global Uncertainty**: There is an expectation of ongoing disruptions and global uncertainty affecting supply chains.
• 🚨 **Labor Shortage**: A significant challenge in the near future is anticipated to be a shortage of skilled labor in the supply chain industry.
• 📚 **Skill Set Shift**: There is a current focus on supply chain with better questions being asked about orchestration and standing up supply chains.
• 🤖 **AI Assistance**: AI will help mitigate some of the labor shortage issues but is not expected to fully solve the problem.
• 🏢 **Cooper's Focus**: Cooper is a business management platform focusing on integrating supply chain finance and procurement for a seamless flow, moving towards direct spend.

Q & A

What are the three components of supply chain resilience as mentioned by Paul Webb?

The three components of supply chain resilience are efficiency, flexibility, and responsiveness. Efficiency refers to structuring supply chains to be as efficient as possible, flexibility is about the ability to orchestrate changes in the supply chain to respond to disruptions, and responsiveness is about the speed at which decisions are made and executed in the face of disruptions.

What does Paul Webb mean by 'by Design' supply chain state?

The 'by Design' supply chain state refers to the intended and structured configuration of a supply chain. It is about understanding how much of the spend or unit volume is following the designed plan and what the cost per unit is for any deviation, known as a 'Rogue shipment'.

How does Paul Webb describe the role of leadership during supply chain disruptions?

During supply chain disruptions, leadership plays a critical role in aligning the organization on the necessary actions. It involves managing the input from various skilled individuals with different opinions and ensuring that the organization can execute the decided course of action swiftly and effectively.

What is the primary output of a supply chain optimization system according to Paul Webb?

The primary output of a supply chain optimization system is a set of supply chain policies. These policies include decisions on inventory levels, transportation strategies, product flow, sourcing locations, and how the product should be distributed.

How does Paul Webb differentiate between supply chain planning systems and optimization systems?

Planning systems are focused on shorter-term control mechanisms for product replenishment and availability to customers, while optimization systems are longer-term tools for supply chain design. The optimization systems provide policies that are then implemented in planning systems.

What does Paul Webb predict as a significant challenge for supply chains in the near future?

Paul Webb predicts that labor shortage will be a significant challenge for supply chains in the near future. He mentions that there is a lack of skilled workers, and while AI can assist, it may not fully compensate for the gap in the labor market.

What is Cooper's main focus as a business management platform?

Cooper's main focus is on providing a business management platform that handles everything from procurement to payroll and finances. It is traditionally focused on indirect spend but is moving towards direct spend. Cooper aims to integrate supply chain finance and procurement in a more seamless flow.

How does Cooper's acquisition of Llamasoft contribute to its supply chain capabilities?

The acquisition of Llamasoft allows Cooper to offer supply chain design capabilities within its platform. It enables users to create digital twins to test various scenarios using AI prescriptions, providing a more data-driven approach to supply chain optimization.

What is a 'digital twin' in the context of supply chain design?

A digital twin in supply chain design is a virtual model of the supply chain that allows designers to simulate and test different scenarios. It helps in identifying the biggest opportunities for optimization without the need for physical experimentation.

What is the role of AI in Cooper's supply chain solutions?

AI in Cooper's supply chain solutions is used to test thousands of different scenarios and provide a list of the biggest opportunities for optimization. It helps in automating the process of identifying the most effective strategies for supply chain management.

How does Cooper's platform help supply chain leaders in the C-suite?

Cooper's platform empowers supply chain leaders by providing them with more control over their supply chains. It allows them to validate and adopt the best strategies identified by the AI, and directly implement these into their supply chain operations.

What is the significance of testing multiple scenarios in supply chain design?

Testing multiple scenarios is significant as it allows supply chain designers to explore various possibilities and identify the most effective strategies without the risk and cost associated with real-world experimentation. It leads to more informed decision-making and better-optimized supply chains.