How to Deal with Uncertainty in the Supply Chain
January 11, 2011
Although the U.S. manufacturing sector has been steadily recovering from the economic downturn, supply chain leaders still struggle to cope with the uncertain global economy in 2011. Supply chain leaders are more uncertain now than they were a year or two ago and overwhelmingly so according to a recent Tompkins Supply Chain Consortium survey of logistics executives from a variety of industries. The events of the past two years and the precariousness of the near future are challenging forecasting, budgeting, business planning and other processes that are dependent on historical information. According to the consortium's findings, the greatest uncertainty is in supply chain functions like planning, sourcing, sales, customer service and transportation. "The planning and sales areas are highly dependent on historical data and forecasts. With the last two years being uniquely difficult and impossible to predict, it is not surprising that planning and sales are high on the list," the benchmarking and best practices report, titled Uncertainty is Certain: Perceptions of Future Risk on the Rise
- Adding cost;
- Increasing inventory levels;
- Increasing lead-times; and
- Reducing speed to market.
- Having focused, small teams of the right people to drive closure and minimize risk;
- Being proactive and agile by improving planning systems and reducing cycle times;
- Balancing network design, customer demand volatility and customer satisfaction;
- Increasing focus on planning, operational excellence, technology implementation and collaboration;
- Improving the recognition of risk profiles and building contingency planning capabilities;
- Developing and implementing a risk-management strategy, and monitoring the supply chain regularly;
- Working on backup suppliers and freight companies to reduce supply risk/uncertainty;
- Focusing on supplier development, a near-shoring strategy, lean and partnering; and
- Proactively driving out waste in supply chain areas where the firm has control.