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Supply Chain: Readiness for the next disruption

Over the last twelve months, supply chains of all types have been challenged by the Covid-19 pandemic.

It has been a struggle for many organizations to consistently source inventory, retain labor, and secure transportation. Their travails gained attention from the popular press and everyday conversations took on a supply chain focus.

Often missed by the pundits are the success stories of companies that were well prepared for this type of disruption. These organizations quickly stabilized their supply chains and acclimated to the “new normal” brought about by the pandemic.

As the magnitude and duration of Covid became clearer, these supply chain leaders developed workarounds and new procedures to maintain product flows to key customer segments.

Thankfully, many organizations in the fresh produce supply chain displayed great agility in the face of adversity. Unlike the well-documented shortages of toilet paper, cleaning products, and canned goods, the farm-to-fork supply chain maintained a relatively stable flow to retailers as customer buying patterns shifted.

The dexterity of these industry leaders amid rapidly evolving conditions is a case study in disruption readiness.

AGILITY: THE CONCEPT
Agility is a capability that is sometimes easier to see in action than to clearly define. We marvel at relief agencies that quickly mobilize during disasters and the coach who makes exceptional halftime adjustments.

Their successes are not achieved by chance. They analyze risk scenarios, develop contingency plans, and lay the foundation for rapid response. In essence, agility (rather than luck) is what happens when preparation meets opportunity.

Supply chain agility has been a widely cited company objective for decades. It was popularized by Dr. Hau Lee in “The Triple-A Supply Chain,” a 2004 article published in the Harvard Busines Review.

Lee explains that the objectives of agility are to respond to short-term changes in demand or supply quickly and cost efficiently, as well as to handle external disruptions smoothly.

His article cites information flows, supplier collaboration, inventory buffers, dependable logistics, and contingency planning as key elements of an agile supply chain.

To determine if these characterizations still hold true today, we connected with supply chain experts from five different organizations. These discussions centered on concepts that align well with Lee’s research. The experts consistently used the words adjust, adapt, and respond.

Steve Roosdahl, vice president of operations for Oppy, Vancouver, BC, says, “Agility focuses on understanding and adapting to your environment. It requires good communication to actually implement.”

The efficiency element of Lee’s definition was mentioned by Chuck Curl, director of regulatory, risk and compliance at Bancroft, WI-based RPE Inc. “Agile companies respond fast in an efficient manner,” says Curl. “You have to discuss risks, craft a plan, and move forward.”

This planning orientation was echoed by Mason Brady, CFO and director of supply chain for Homegrown Organic Farms in Porterville, CA. He highlights the need to move beyond being reactive in the face of disruptions.

“Agility is the ability to respond quickly,” Brady explains, “but the strategic differentiator is less about responding to what hits you and more about trying to foresee what is coming down the pipeline.”

Researchers at the University of Tennessee define supply chain agility as a company’s ability to quickly adjust tactics and operations. To build upon this simple yet eloquent definition, Tom Goldsby, the James A. Haslam II Chair of Logistics, shared insights on five dimensions of supply chain agility—alertness, accessibility, decisiveness, swiftness, and flexibility.

“The first three elements are what we might call cognitive forms of agility. Swiftness and flexibility are more structural or physical,” Goldsby notes. “We position it as brains versus brawn or planning versus execution.”

The experts’ collective insights converge on the need for both planning and execution. A produce company cannot succeed merely by reacting to supply chain issues after they occur. Panicked approaches to handling disruptions will be neither cost efficient nor provide effective service.

Upfront planning and strong execution capabilities are essential to create a more resilient and responsive supply chain that can change course in orderly fashion.

This is a Supply Chain Solutions feature from the March/April 2021 issue of Produce Blueprints Magazine. Click here to read the whole issue.

Dr. Brian Gibson is executive director of Auburn University's Center for Supply Chain Innovation and a former logistics manager.