26/09/2020

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4 ways businesses can adapt to a changing supply chain environment

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Whether you’re Johnson & Johnson or a family-owned restaurant, the pandemic has disrupted supply chains (and suppliers) the world over. And in times of disruption, business owners are having to pivot and adapt on a moment’s notice.

Long-time supply chain experts Kathy Wengel, the executive vice president and chief global supply chain officer for Johnson & Johnson, and Mary Long, the managing director of the Global Supply Chain Institute’s Supply Chain Forum at the University of Tennessee, have both weathered their fair share of supply chain challenges in the past.

But to survive a crisis that’s impacting all businesses, whether big or small, Long and Wengel outlined a few key strategies to help owners adapt during a Q&A hosted by Fortune.

Scenario planning

With the amalgamation of a bunch of worst-case scenarios happening for many businesses right now, one tool business owners can use to navigate uncertainties is to do scenario planning, says Long.

“In the five years that I led my supply chain team at Domino’s [Pizza], we never shut down a store for lack of food. To do that, we were dealing with other extreme events: extreme weather events, other things, not the combination of everything [like the pandemic],” she said. “But scenario planning really helps a lot to set up: What are the plausible best case scenarios and plausible worst case scenarios?”

The challenge, she says, is to think through how well-positioned the business is for “taking advantage of a best case scenario or mitigating a worst case scenario, and being really honest about that so you have a clear picture of opportunities and risk,” she said.

Plus, the age-old adage of “knowledge is power” seems to ring true for supply chains as well: “Always make sure you have choices. What’s your preferred route, what’s your plan B, plan C, and how much are you willing to pay for executing on those choices?” Wengel notes. “Do that strategy work upfront and then you’ll suddenly find you have more choices than your competitions when you actually need to use them.”

Focus on what your customer needs right now

When there are 101 things to do, prioritizing can be overwhelming. But in a time when pretty much every business is pivoting to adapt to new challenges, it’s key for suppliers to meet those new needs, too.

“No matter how big the business is, and whether we’re in a global crisis or not, the relentless focus on your customer, on what their needs are, and how they are changing is the key to success,” notes Wengel. That might mean shifting focus from one product or service to another that’s more pressing for your customers, she suggests.

Pandemic or not, the ability to know your customers’ needs—and “how they are shifting? How are you part of a solution that helps make their lives better?”—is crucial, Wengel says. If supply chains have shut down or your customer is postponing the launch of new products, “be able to take those and be very self-reflective and realize you can’t push your organization or just your idea to your customers, you have to respond to how their needs evolve.”

That’s what Johnson & Johnson has had to do during the pandemic, too. Wengel notes that when demand “doubled overnight” for fever-reducing medication Tylenol, the company had to pivot and focus on producing more of the basic version of the medication. To “help people get the best resource they need, we had to reflect and say, ‘We can’t do everything, let’s go where our customers need us to go,’” she said.

Draw on past experiences

While it may be easy to feel like a fish out of water during the pandemic, every business owner has faced hurdles in the past—and those like Long point out it’s key to draw on past experiences (and how you dealt with them) to know how best to act in the moment.

“That’s one of the big things that’s come out of this, the agility I’ve seen is going to people who are good at pattern recognition,” Long said. “We’ve all had past experiences, but … you’re able to tap into that and say, ‘Huh, what I learned there can apply here’,” she said.

Track your metrics

The maelstrom of challenges and events surrounding the pandemic has forced business owners to think about how their business needs to adapt in the near-term. But Long and Wengel suggest it’s important to think about your post-pandemic supply strategy (whether as a supplier or buyer) now.

“One of the things I’ve learned … [is] it is really, really good to collect your stories, the positive stories and feedback, in a really disciplined way,” notes Long, and “collect your metrics that support that story.”

The unfortunate reality about times of crisis is that “there are different criteria in crises than in ongoing day-to-day,” notes Wengel. And “If you’re selling into bigger markets, the risk that what you did in that crisis is there, it’s there the next week, it’s there the next month, but then people change,” Wengel says.

While those experiences and results you’ve delivered “do have value, … you’re going to have to keep earning that value and being able to pivot your value proposition right through those different times,” Wengel adds.

To ensure you keep delivering what your customers need, Long and Wengel suggest tracking the criteria—from quality to cycle time to price elasticity—is key. “The more you know about what those are, the more you can tailor what you’re doing to how a company will look at it,” says Wengel.

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This story was originally featured on Fortune.com