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How to break organization silos to improve supply chain resilience

May 6, 2022 - Team EdgeVerve

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Greater logistics effectiveness and efficiency are not just gained by focusing on goods production and transit. Supply chain resilience also depends upon a smooth operation inside a company focusing resources on critical problems, reacting flexibly to a wide range of scenarios, and bringing in stakeholders from across the business to weigh up the options and make the right decisions.

Silos are insular workgroups functioning as individual entities inside the organization. These entities maintain negligible communication with other teams and the outside world.

These silos can affect the supply chain and your organization’s overall performance.

What is supply chain resilience, and how are silos affecting it negatively?

A resilient supply chain refers to its capacity to resist and recover from any disruption caused by predictable and unpredictable factors. The term also defines the ability of the value chain to bounce back quickly, adopt new policies and find new ways to mitigate risks in the demand-supply network. When organizations employ multiple sourcing channels, ensuring the unhindered supply of raw materials and others from numerous routes can achieve supply chain resilience.

Organization silos can be detrimental to building supply chain resiliency. But who is responsible for these silos? The lack of the flow of information and a collaborative framework indirectly feed silos in the organization. Each department sets up goals that eventually conflict with the purposes of the other departments.

Then, there are data silos to consider. When crucial insights are collected and recorded by one department but not shared with others, silos appear, which impacts the company’s decision-making as a whole.

How can organizations break silos to build a resilient supply chain?

To break the shackles of silos and achieve supply chain resiliency, businesses should follow specific approaches; a few of which are described below:

Creating internal clarity

The sales and marketing functions may not be 100% aligned and connected to many supply chain functions. This reduces visibility and creates internal friction as supply chain teams struggle with new product launches or demand fluctuations, while sales and marketing lack awareness of what is possible from a logistics perspective.

Hence, it is critical to look closely at how the business aligns across functions and how information is disseminated, utilized, and acted upon.

The break in internal silos helps increase the clarity of its overall objectives and how it plans to achieve them, allowing the company’s top leaders to manage operations timely and efficiently. Sharing information from the lowest plant level up to the head of the organization results in prompt and updated situational awareness about any crisis and initiating actions accordingly. Any minor disruption at any point in the supply chain can rapidly cascade downwards, meaning if one business unit has been affected immediately, other business units get affected very soon.

Therefore, businesses should encourage cross-organizational coordination and sharing of information to build a resilient supply chain. This allows suppliers to proactively share information with the purchasing department to facilitate the collation of the best data on a particular day of a certain week in order to make the best decision for the subsequent production forecasts.

Prioritizing disruptions

Frequent internal meetings between departments not only break the existing silos but also work together to minimize the potential for significant disruption in the supply chain. By bringing more than two heads together, they quickly focus on key areas or particular moments of disorder. “What are the most critical materials and sub-components? Where are the transportation bottlenecks?”

These are the questions that supply chain planners need to ask in order to prioritize the correct route in their planning as soon as an adverse event occurs and then cascade that through their organization and straight to key suppliers. They should focus on what they need to be monitoring and then which levers to pull, so they can prioritize that in the moment and not waste time figuring out what is going on and what direction to take.

Keeping on top of changing scenarios

Creating an outlook and a plan for the complete unknown can cause severe headaches for supply chain professionals. Usually, the disruptive circumstances are unprecedented, for instance, the COVID pandemic. Outside of global conflict, there hasn’t been a comparable point where different international trade and production elements have been affected severely.

Hence, one can conclude that the forecasts are unreliable. Increasing the frequency of planning meetings and building close coordination across organizations is essential. Equally crucial is to have shared knowledge about the most functionally critical and vulnerable elements existing within the supply chain. Experts believe scenario planning and utilizing digital twins in a sandbox environment is the best way for businesses to build resilient supply chains. These can take a real-world structure and allow planners to change critical variables to understand how a scenario will play out.

Once scenarios are planned out, it is vital to share these with business-critical suppliers then, so that when an issue strikes, every key player in the supplier chain follows the same rule book.

Conclusion

Before drawing any inferences, businesses should focus their attention internally and understand how silos within the four walls create bottlenecks in the entire value chain. Supply chain resilience is achievable only when the walls are broken down and information is shared unhindered downwards to the lowest levels.

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