Perhaps one of the most dangerous assumptions a business can make right now is that the pandemic is to blame for the supply chain crisis.

Of course, the pandemic exacerbated issues. But even before COVID-19 struck, the conditions for capacity constraints were starting to build, fueled in large part by geopolitical volatility. Believing — or hoping — that supply chains will right themselves as we return to normal will only leave businesses unprepared for future similar crises. 

The hard truth is that there are no quick fixes to today’s capacity-constrained environment and managing a supply chain is harder than ever before. This is what makes it so critical for organizations to build additional capabilities and skills. We must embrace a different way of preparing — one that is less straightforward and more variable than past iterations. 

The task is daunting but not impossible, especially when broken down into actionable steps. Following are five key actions and behaviors to help organizations manage and thrive in the new environment.

Be bold, go bespoke. When pandemic-driven demand for home electronics spiked, the surge created a ripple effect impacting multiple industries that had to put production on slow. Twenty years ago, we never would have imagined that the popularity of consumer electronic devices such as TiVos could lead to a slowdown in production and delivery of Toyotas. But thanks to a shared reliance on semiconductors, this is essentially what happened. Moreover, this is just one example of the myriad hidden vulnerabilities that were laid bare over the last 18 months. 

The solution is simple in principle but complicated in execution: detailed mapping of supply chain links to help organizations identify — and respond to — fissures before they become fractures.

This type of full visibility is the supply chain holy grail — and the organizations closest to grabbing the prize are the ones who have been bold enough to consider integrating bespoke solutions as part of the overall approach. Unlike many areas of IT where custom solutions can add greatly to cost while offering little value, when it comes to supply chain mapping, it can actually be more efficient to create and maintain custom solutions.

Adopt a bias for action. We are a country of navel gazers — both personally and professionally. Far too many companies continue to admire the problem, adopting the mien of academic curiosity. They have volumes of knowledge about which supply base, geography or supplier is introducing the most stress into their supply chain, but they take no steps to action this information, choosing instead to continue gathering more information. 

Don’t let perfect be the enemy of good. If you know roughly where your stress points are, you can make some significant strides with existing integration of technology today if you apply it strategically. In business as in life, timing is everything, but “right now” is almost always a pretty good time.

Increase aperture and frequency of assessments. When humans finally accepted that the world was round, they invented globes. Why? Because, when the world changes, you have to change the way you look at the world. This applies no less to supply chains than to geography and astrology.

Historically, when companies looked at their supply-side vulnerabilities, they often defaulted to focus on better understanding supplier financial health. But alas, the world has changed — and this view is no longer sufficient. Additional factors such as supplier performance, inventory positioning, sourcing strategies and process adherence need to be evaluated to truly understand supply-side vulnerabilities. 

Moreover, quarterly assessments are no longer enough. For decades we’ve relied on QBRs to drive continuous improvement, but the pace of commerce, innovation, and change hasn’t moved that slowly in a long time. In the modern supply chain, a QBR will never give you an advanced warning of a potential problem. Instead, ongoing strengthening of supplier relationships and working towards greater supplier stability are critical to ensuring that a company has access to data and insights needed to optimize approaches and achieve goals.

Lastly, it is critical to marry the human touch with cutting edge technologies. Predictive modeling and AI tools can provide that warning system, detecting patterns far quicker and sooner than a human being and sending up a flare when certain conditions are identified so that the human team can proactively manage the situation. 

Segment customers to drive understanding. In many industries, we’ve strayed too far from one of the most basic tenets of running a successful business line: Know Your Customer. While this is always good advice, it is arguably even more important in times of constrained capacity — when everyone is fighting for the same limited resources.

Category managers and planners should know the products and specifications as well as the suppliers do themselves. The problem is nobody has time to do it. At KPMG, we often hear from planners and inventory managers who say they spend up to 80% of their time firefighting rather than being strategic. With only 20% of capacity available to tackle such an important task, focus is critical. This is where segmentation comes in.

Well-honed customer segmentation can help managers and planners focus their knowledge-gathering and relationship building where it matters most. And it does matter. When you cease being a student of the game and resort to managing numbers on a spreadsheet, you lose the ability to anticipate and find alternatives. 

Accept that ROI is not a static calculation. Without question, risk reduction is costly — and we don’t suggest that organizations take all measures to reduce risk at any cost. Still, in the current manic environment, where one late truck can cause a ripple effect associated with several million dollars of impact, something needs to change.

Modeling helps organizations understand how to reduce risks to the minimum appropriate level. But perhaps the most fundamental concept to understand — and embrace — is that the equation has changed, and it is constantly changing.

Just as before, when we say that QBRs are grossly inefficient — the same underlying reasons are forcing unprecedented agility and flexibility in the areas of ROI and risk-related spend.

The only constant in supply chain management for the foreseeable future continues to be variability. Supply chain professionals are now playing a game where the next curveball might actually be a basketball, or a hockey puck, or even a stadium. The point is, we just don’t know what’s going to happen. What we do know is this: With the right strategies in place, and a culture of agility, organizations can respond to whatever comes their way.

Brian is a principal in KPMG’s Advisory Services practice focused on strategy and operations management consulting. 

Perhaps one of the most dangerous assumptions a business can make right now is that the pandemic is to blame for the supply chain crisis.

Of course, the pandemic exacerbated issues. But even before COVID-19 struck, the conditions for capacity constraints were starting to build, fueled in large part by geopolitical volatility. Believing — or hoping — that supply chains will right themselves as we return to normal will only leave businesses unprepared for future similar crises. 

The hard truth is that there are no quick fixes to today’s capacity-constrained environment and managing a supply chain is harder than ever before. This is what makes it so critical for organizations to build additional capabilities and skills. We must embrace a different way of preparing — one that is less straightforward and more variable than past iterations. 

The task is daunting but not impossible, especially when broken down into actionable steps. Following are five key actions and behaviors to help organizations manage and thrive in the new environment.

Be bold, go bespoke. When pandemic-driven demand for home electronics spiked, the surge created a ripple effect impacting multiple industries that had to put production on slow. Twenty years ago, we never would have imagined that the popularity of consumer electronic devices such as TiVos could lead to a slowdown in production and delivery of Toyotas. But thanks to a shared reliance on semiconductors, this is essentially what happened. Moreover, this is just one example of the myriad hidden vulnerabilities that were laid bare over the last 18 months. 

The solution is simple in principle but complicated in execution: detailed mapping of supply chain links to help organizations identify — and respond to — fissures before they become fractures.

This type of full visibility is the supply chain holy grail — and the organizations closest to grabbing the prize are the ones who have been bold enough to consider integrating bespoke solutions as part of the overall approach. Unlike many areas of IT where custom solutions can add greatly to cost while offering little value, when it comes to supply chain mapping, it can actually be more efficient to create and maintain custom solutions.

Adopt a bias for action. We are a country of navel gazers — both personally and professionally. Far too many companies continue to admire the problem, adopting the mien of academic curiosity. They have volumes of knowledge about which supply base, geography or supplier is introducing the most stress into their supply chain, but they take no steps to action this information, choosing instead to continue gathering more information. 

Don’t let perfect be the enemy of good. If you know roughly where your stress points are, you can make some significant strides with existing integration of technology today if you apply it strategically. In business as in life, timing is everything, but “right now” is almost always a pretty good time.

Increase aperture and frequency of assessments. When humans finally accepted that the world was round, they invented globes. Why? Because, when the world changes, you have to change the way you look at the world. This applies no less to supply chains than to geography and astrology.

Historically, when companies looked at their supply-side vulnerabilities, they often defaulted to focus on better understanding supplier financial health. But alas, the world has changed — and this view is no longer sufficient. Additional factors such as supplier performance, inventory positioning, sourcing strategies and process adherence need to be evaluated to truly understand supply-side vulnerabilities. 

Moreover, quarterly assessments are no longer enough. For decades we’ve relied on QBRs to drive continuous improvement, but the pace of commerce, innovation, and change hasn’t moved that slowly in a long time. In the modern supply chain, a QBR will never give you an advanced warning of a potential problem. Instead, ongoing strengthening of supplier relationships and working towards greater supplier stability are critical to ensuring that a company has access to data and insights needed to optimize approaches and achieve goals.

Lastly, it is critical to marry the human touch with cutting edge technologies. Predictive modeling and AI tools can provide that warning system, detecting patterns far quicker and sooner than a human being and sending up a flare when certain conditions are identified so that the human team can proactively manage the situation. 

Segment customers to drive understanding. In many industries, we’ve strayed too far from one of the most basic tenets of running a successful business line: Know Your Customer. While this is always good advice, it is arguably even more important in times of constrained capacity — when everyone is fighting for the same limited resources.

Category managers and planners should know the products and specifications as well as the suppliers do themselves. The problem is nobody has time to do it. At KPMG, we often hear from planners and inventory managers who say they spend up to 80% of their time firefighting rather than being strategic. With only 20% of capacity available to tackle such an important task, focus is critical. This is where segmentation comes in.

Well-honed customer segmentation can help managers and planners focus their knowledge-gathering and relationship building where it matters most. And it does matter. When you cease being a student of the game and resort to managing numbers on a spreadsheet, you lose the ability to anticipate and find alternatives. 

Accept that ROI is not a static calculation. Without question, risk reduction is costly — and we don’t suggest that organizations take all measures to reduce risk at any cost. Still, in the current manic environment, where one late truck can cause a ripple effect associated with several million dollars of impact, something needs to change.

Modeling helps organizations understand how to reduce risks to the minimum appropriate level. But perhaps the most fundamental concept to understand — and embrace — is that the equation has changed, and it is constantly changing.

Just as before, when we say that QBRs are grossly inefficient — the same underlying reasons are forcing unprecedented agility and flexibility in the areas of ROI and risk-related spend.

The only constant in supply chain management for the foreseeable future continues to be variability. Supply chain professionals are now playing a game where the next curveball might actually be a basketball, or a hockey puck, or even a stadium. The point is, we just don’t know what’s going to happen. What we do know is this: With the right strategies in place, and a culture of agility, organizations can respond to whatever comes their way.

Brian is a principal in KPMG’s Advisory Services practice focused on strategy and operations management consulting.