Mastering global disruption

Summary

John Gattorna emphasizes the critical role of supply chains as the business's central nervous system, particularly in the face of increasing volatility and unpredictability. He discusses the need for supply chains to balance multiple objectives such as customer satisfaction, margin, sustainability, resilience, and adaptability. Gattorna suggests a shift towards sovereign supply chains for regional reinvestment and highlights the importance of digitization and real-time data for achieving end-to-end visibility and competitive advantage. He concludes that the ability to make faster decisions than competitors is the key to success in the next decade.

Takeaways

• 🧠 Supply chains are the central nervous system of business, highlighting their critical role in organizational operations.
• 🌪️ We live in a world of volatility with 'black swan' disruptions, suggesting the need for robust supply chain strategies.
• 💸 Companies on average lose 42% of one year's EBIT every ten years due to disruptions, emphasizing the financial impact of supply chain issues.
• 🔮 Supply chains must now address multiple objectives including customer satisfaction, margin, sustainability, resilience, and adaption.
• 🌐 Globalization has peaked from a supply chain perspective, indicating a shift towards more localized approaches.
• 🔄 The concept of 'sovereign supply chains' is introduced as a hybrid approach to reinvest in regional manufacturing and reduce reliance on long supply chains.
• 🛡️ Resilience is measured by the time to recover from disruptions, and overly lean supply chains can become brittle and break under stress.
• 💡 Innovation in supply chain solutions is necessary to address unpredictability and the need for quick recovery from disruptions.
• 📊 Digitization of data along the supply chain is crucial for real-time visibility and decision-making, providing a competitive advantage.
• 🏎️ The ability to make decisions faster than competitors is the name of the game in the next decade, making digital transformation imperative for businesses.

Q & A

What is the significance of supply chains in business, according to John Gattorna?

Supply chains are considered the central nervous system of a business. They are crucial for managing the flow of goods, information, and resources that are essential for the business's operation and success.

What does John Gattorna mean by 'black swan' type disruptions?

'Black swan' type disruptions refer to unexpected and highly impactful events that can cause significant interruptions to supply chains, such as natural disasters or global pandemics.

How often does Gattorna suggest we can expect major supply chain disruptions?

Gattorna suggests that we can expect a major supply chain disruption roughly every five years.

What potential impact can these disruptions have on a company’s financial performance?

On average, companies could lose 42% of one year's Earnings Before Interest and Taxes (EBIT) every ten years due to unplanned disruptions.

How does Gattorna describe the current state of uncertainty in supply chains?

He describes the current state as moving beyond uncertainty to unpredictability, where multiple objectives must be managed simultaneously, including customer satisfaction, margin, sustainability, resilience, and adaptability.

What is meant by a 'sovereign supply chain'?

A 'sovereign supply chain' refers to a strategy where regions reinvest in local manufacturing and supply chain capabilities to reduce dependency on long global supply chains, providing more resilience against future disruptions.

What does Gattorna suggest is the 'Holy Grail' for supply chain management?

The 'Holy Grail' for supply chain management is achieving end-to-end visibility of the supply chain, which allows businesses to see what is happening in real-time and make quicker, more informed decisions.

Why is digitization of data along the supply chain critical?

Digitization of data is crucial because it enables real-time visibility and faster decision-making, which provides a competitive advantage in a rapidly changing business environment.

What does Gattorna suggest about the approach businesses should take towards supply chain management?

Gattorna suggests that there isn't a one-size-fits-all solution; instead, businesses should adopt a hybrid approach that balances efficiency with resilience and adaptability.

What is the future challenge for management, according to Gattorna?

The future challenge for management is the ability to make faster decisions than competitors, especially in a world where digital transformation is critical. Businesses that are not on the digital pathway are considered to be falling behind.