The Sonoran Desert where I live can feel like a hostile environment, with at least 3-15 inches (7-38 cm) of annual rain and a scorching sun that can reach 118 degrees Fahrenheit (47 degrees Celsius). However, the flora, fauna, and indigenous peoples thrive in this environment with resourcefulness and adaptability. The supply chain future I anticipate brings new risks and challenges, along with the recognition that doing things the same way will no longer lead to the same success. We must adapt now to survive. What can supply chain leaders learn from the desert to help us chart a path to the future of the supply chain and ensure the kind of supply chain resilience that characterizes the deserts?
Invest in your ecosystem
The great saguaro cactus, a symbol of the Southwest, can grow to be over 70 feet (over 21 meters) tall and live to be over 200 years old, but grows as little as an inch (2.5 cm) in its first 10 years. This slow start of life begins under “pathogenic” plants, which provide protection from sunlight and predators. When mature, sagos, in turn, become “nurse” plants for woodpeckers, owls, hawks and songbirds, who all use them for nests.
Just as a saguaro is nurtured and supported by life in its ecosystem, supply chains must invest in their ecosystems, both from suppliers and employees. Ford Motor is investing in domestic battery production and Unilever’s Partner with Purpose program seeks to expand its ecosystem even by building capacity at suppliers in emerging markets. Similarly, only 27% of supply chain leaders said they have the talent they need to meet their current challenges, but leaders are those in this minority, who develop the talent they have for the future of the supply chain they will face.
Grow when you have your “day in the rain”
While the lack of rain may be what comes to mind when you think of the desert, the biggest challenge is its diversity. In some years, a single storm can dump 50% more rain than in previous years. Octillo plants may look like dry sticks most of the year, but they have learned to seize the day when it comes and can sprout leaves within 72 hours after a good rain. Desert plants and animals have all kinds of interesting modifications like this one to take advantage of the rain when it falls.
You may be feeling windy times for the supply chain right now, but not all rain is bad. Having a ‘day in the sun’ means being noticed and appreciated, but in the desert we might flip that text and call it a ‘day in the rain’, given the humidity a storm can bring. So while supply chains are discussed at the board level and on earnings calls, we’re having our moments in the rain. Like the ocotillo, we need to take advantage of this rainy moment to grow.
Now is the time to showcase the competitive advantages of supply chains so that we can increase the investment needed to achieve those results. But to work at the board level, we need to be able to speak the language of the CFO. Supply chains must be interconnected and collaborative so that all links can align with business strategy and directed toward a common set of most important metrics (not the functional metrics that drive isolated behaviour). This alignment will produce results that attract the attention of the CFO and are reported in the boardroom and in earnings calls.
Mounting to protect against attack
The desert is famous for spikes and thorns, which makes it seem like a dangerous place. In fact, this design not only prevents water loss by reducing the surface area for evaporation, but also prevents predation by most creatures. Animals that try to take a bite out of an aloe vera plant in search of food or moisture will come back to bite off the spines.
Current security protections aren’t enough, so supply chains need sharp thorns to fend off the growing threat of cyberattacks, which the European Union’s cybersecurity agency (ENISA) estimates will quadruple this year. Attacks can move quickly due to their cascading effect on supply chains, so the risk of harm to business and customers is high. As IT and OT (Operational Technology) converge, as smart factories pass data back and forth to the supply chain, the attack surface grows. ENISA cites the greatest risk from supplier code, but data and internal processes pose a risk as well. Increased investment in cybersecurity is critical to preventing the supply chain from breaking down.
Transformation from just in time to just in case
Many desert plants are classified as succulents, meaning that they are thick and fleshy that absorb water quickly and lose it slowly and carefully. As the rain was dry and erratic, they should be able to store water and carefully preserve this treasure. However, just storing water in time is not enough; Succulents have additional adaptations to help reduce water loss, such as a special form of water-saving photosynthesis that also allows them to slow down their metabolism during dry spells. These redundant protective mechanisms are essential to their survival and mean they will only have water if the skies don’t open again for several months.
Supply chains have been swept by a wave of lean practices and just-in-time inventory for years, but the money saved has come at the cost of flexibility and supply chain resilience, a price that has been paid dearly during the pandemic. Decreased appetite for supply chain risk and hunger for increased supply chain resilience mean that inventory strategies must adapt to new approaches. The future of the supply chain includes a return to dual sourcing and other redundancy practices to mitigate risks, but buffers should not explode. Simultaneous planning could allow companies to activate capabilities such as agility and transparency to prevent stockouts while not creating surplus stocks, as global biopharmaceutical manufacturer Ipsen has done.
Minimize waste and aim for circular, not linear, designs
Hohokam flourished for nearly 1,500 years in the southwest even just before the arrival of the Spaniards because they were masters of the desert. In this dry climate, they created a fertile agricultural area that supported tens of thousands of people. They wasted nothing, using many parts of plants and animals and engaging in sustainable agriculture through crop rotation and soil management to make up for lost nutrients. But they became famous for their elaborate irrigation system, one of the most advanced ever and the basis of the canals that still flow through my hometown.
Most of today’s supply chains are linear, starting with the raw materials we make into products and then disposing of them at the end of their life. Moving toward a circular supply chain means finding ways to reduce (like Jabil’s multifaceted efforts to use less packaging), reuse (like Cisco’s Takeback and Reuse Program), and recycle (like Procter & Gamble’s commitment to using all reusable or recyclable packaging). by 2030). These types of shifts toward a circular economy can save costs and even generate revenue. But more importantly, it increases resilience by mitigating the risks of climate change, which the McKinsey Global Institute predicts will be more important than a pandemic. Reducing reliance on scarce raw materials, reusing existing materials, and recycling those at the end of their lifespan reduces pressure on resources in a constrained world.
The future of the supply chain can be full of prosperity
Addressing the trends driving the future of the supply chain won’t be easy, so it’s time to invest in digital transformation to adapt to new risks, as well as new opportunities. The future we face may seem threatening, so it is wise to look at the regimes and peoples who have survived under what appear to be hostile conditions. The desert is a prime example of resilience. We, too, can learn to thrive in amazing places.
Polly Mitchell Guthrie is Vice President of Industrial Communication and Thought Leadership at Kinaxis, the leader in empowering people to make reliable decisions about the supply chain. Previously she has held positions as Director of Analytical Consulting Services at the University of North Carolina Healthcare System, Senior Director of the Advanced Customer Analytics Group in SAS Research and Development, and Director of the SAS Global Academic Program.
Mitchell Guthrie has an MBA from the University of North Carolina’s Kenan Flagler School of Business at Chapel Hill, where she also holds a BA in political science as a scholar at Morehead. She has been active in many roles within INFORMS (Institute for Operations Research and Management Sciences), including as President and Vice Chair of the Analytics Accreditation Council and Secretary of the Analytics Association.