A Solution Approach to Chaos in the field of Operations and Supply Chain – VUCA3.0
Inspired-Search | 21 september 2017
Written by: Annemieke Gelder
With the amount of innovation and digitalization around us, these are probably the most exciting times for Supply Chain professionals. In the next series we will discuss a couple of key Supply Chain trends and considerations for your strategic and organizational needs and to shape your next generation supply chain.
One of my bosses would always say “Don’t bring me problems, give me solutions”… And that’s how it is in the field of Operations and Supply Chain: things are expected to go smooth and no ripples to occur. However we know that issues can happen all the time, and when things really go wrong the attention is “ON” from all directions and a situation is best to be avoided.
The increased perception of complexity
Business leaders are more and more concerned with the level of complexity, the adversity of disruption and risk their businesses face today, especially as supply chains have become more globally connected, and goods traveling from more origins and further distances.
VUCA is an acronym for Volatility, Uncertainty, Complexity, and Ambiguity and is a principle that stems from the US military in the 1990’s. This term seems to become very popular again, probably as a result of this perceived increased complexity, seemingly more incidents and disruptive technology being introduced.
Where VUCA is a practical guideline, allowing organizations to assess their capacity to anticipate and deal with adversity, their consequences, and navigate through the potential challenges.
Such “what if” assessment and identification of potential chaos can be quite overwhelming for business leaders and may actually only result in re-active ‘business continuity planning’. The necessary pro-active approach to deal with VUCA on an ongoing basis may be overlooked, embrace it, or even turn it to a competitive advantage or opportunity.
Blue Ocean approach to embrace chaos into a constant state
I would like to introduce VUCA3.0, and consider this as the ‘blue ocean’ variant for the original VUCA. VUCA3.0 is positioned to be a solution-oriented approach where volatility, uncertainty, complexity and ambiguity can be embraced. A day without VUCA3.0 would become a dull day in the office.
When writing this blog post I looked up VUCA2.0 and found that Forbes yet published an article on VUCA2.0.
I recommend reading this one too, however, this is focused on the people side and leadership style to deal with VUCA.
I’m not arguing here that organizations should no longer use the original VUCA to understand the weaknesses and risk, but offer an alternative to define, strengthen and visualize the business landscape your operate in.
Model 1 shows VUCA3.0, which business leaders can step through to identify the status quo and opportunities they can take to future proof their supply chains. The field of Supply Chain is a key binding function between engineering, manufacturing, sales & marketing and a good starting point to address the VUCA3.0 opportunity. VUCA3.0 envisions enhanced supply flexibility, optimal route to market and an adequately and pro-actively management of complexity.
Model 1. VUCA3.0
VUCA3.0 is an opportunity model
Where in a trading environment such as banks and commodity traders, volatility is used to create trading opportunities in traditional operations, this is considered a recipe for noise. Having total visibility of the relationships of any of the transactions and shipments across your supply chain, allows for a quick assessment and agile decision-making. With increased visibility, potential weaknesses or bottlenecks in your supply chain can be addressed pro-actively and on an ongoing basis.
Omni channel provides an unlimited number and unconstrained opportunities to connect and transact with your customers and supply chain partners. Organizations should look beyond the known boundaries, flex their muscles and explore unknown territories to stay ahead of competition and build on the customer experience.
The connected world of social media and digitalization is not making the environment more complex but allows for a faster and closer relationship development. Organizations can move from being connected to tight collaboration within the supply chain. Control Towers can further enhance the connectivity in conjunction with the aforementioned visibility and agility.
Available technology and digitalization will increase the amount of data ready for analytics. Automation of business processes by robots can remove any non-value add activities for your resources.
What does your operating model and organization look like upon applying Artificial Intelligence (AI), and identify the module that your need to implement. AI will allow for rapid learning, recognition of patterns in supply & demand or the lack thereof.
Supply chains are no longer linear and are highly intertwined networks that benefit from enhanced visibility, managed connectivity and automation. AI will be a key driver to the data analytics on these networks and support the overall decision-making process.
Annemieke Gelder has over 16 years experience in end-to-end supply chains across different industries. She is a certified Procurement Professional (MCIPS), Project Manager (PMP) and holds a MSc Business Administration in Supply Chain of the Rotterdam School of Management. She recently set up www.supplydirection.com to channel her learnings and views on supply chain trends, as well help businesses shaping and improving their supply chains operations.
Reading more blogs of Annemieke?
Consider reading her blog: Omni-Channel Distribution as a Cross-Functional Symbiosis