Insights from the North American Manufacturing Association, Manufacturing Leadership Conference

Insights from the North American Manufacturing Association, Manufacturing Leadership Conference

I recently had the opportunity to speak at the North American Manufacturing Association’s Manufacturing Leadership Conference in Nashville, focusing on the critical topic of using data to enhance supply chain resilience. This discussion comes on the heels of the White House Council on Supply Chain Resilience’s announcement of 30 proposed actions to strengthen America’s supply chains and the ASCM’s latest publication on resilience.

Background The Council of Supply Chain Resilience, which convened for the first time this month, is co-chaired by the National Security Advisor and National Economic Advisor. It includes high-level representatives from numerous federal departments and agencies, including Agriculture, Commerce, Defense, Energy, and more. Key initiatives include leveraging the Defense Production Act to improve drug accessibility, enhancing cross-government data sharing, expanding the “FLOW” program for logistics information sharing, and conducting a comprehensive supply chain review by December 31, 2024, to assess national security impacts.

Lora’s Perspective To approach this topic without political bias, we first need to clarify what “supply chain resilience” means and why it is vital. The term is widely used but often lacks a clear definition. According to Supply Chain Insights, supply chain resilience is “the ability of an organization to deliver reliable and consistent results for revenue, margin, customer service, and quality in the face of demand and supply variability.” The ASCM defines it as the ability of a supply chain to anticipate, avoid or mitigate, and recover from disruptions.

Commercial Performance and Resilience Using the Supply Chain Insights definition, it’s worth asking how we are performing commercially against this goal. In Q3 2023, 38% of manufacturers, distributors, and retailers missed their revenue guidance targets, leading to restatements. This indicates a lack of resilience, as accurate revenue forecasting is crucial for organizational stability.

The ASCM’s definition, which emphasizes a reactive approach to disruptions, is outdated. Organizations need to be proactive in sensing, responding, and adapting to changes. For example, my research on inventory management reveals that many companies struggle with resilience. Out of twenty companies interviewed, only one could confidently say they had a good inventory plan. Conventional demand planning technologies and processes often result in negative Forecast Value Added (FVA) measurements, posing a significant risk to resilience.

Key Questions for the President’s Task Force If the industry lacks a clear understanding of resilience, how can the task force fulfill its mission? Here are my recommendations for the task force:

  1. Set Clear Definitions and Goals: Align on the mission and definitions.
  2. Foster Network Interoperability: Build a network of networks under the Defense Production Act, enforcing interoperability among public network companies to improve visibility and data flow.
  3. Address Venture Capital Turnover Risks: The churn in network companies due to venture capital investments reduces innovation and introduces supply chain risks.
  4. Mandate Unique Identifiers: Implement unique identifiers for company entities, warehouses, and manufacturing locations to enhance track and trace capabilities.
  5. Provide a Government Data Lake: Make government data available for demand predictions, leveraging advancements in AI and data management technologies.
  6. Enhance Defense Supply Chain Capabilities: Invest in modeling, simulation, and optimization technologies to improve defense supply chain readiness.

These steps can help build a more resilient and responsive supply chain, ensuring that we are better prepared for future disruptions.

Conclusion Improving supply chain resilience requires clear definitions, proactive strategies, and leveraging existing networks and data. By adopting these measures, we can enhance our ability to anticipate, mitigate, and recover from disruptions, ultimately ensuring a more stable and reliable supply chain.

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