Antifragility In Supply Chains – Monetizing the Challenges

Multiple disruptions, including the pandemic, Russia’s invasion of Ukraine, and supply chain problems, have occurred since 2020, and the world is rather expecting that the next decade will likely bring more of it along.

In times of back-to-back disruptions to the global supply chain, there has been an unprecedented focus on developing resilience. It is now not just an ‘industry buzzword’ but rather a feature of their supply chain that businesses should ensure for continuity.

Antifragility in supply chains has emerged as a transformative concept amidst uncertain times, presenting a paradigm shift from traditional approaches to resilience. Rooted in gaining from uncertainty exposure, this concept accentuates the importance of embracing unpredictability rather than attempting to eliminate it.

According to a survey conducted by American research and consulting firm Gartner in June 2023 – The 2023 Gartner Antifragile Supply Chain Management (Fellows) Survey – 28% of supply chains anticipated no gain or loss in revenue, while a significant 63% expected revenue losses due to exposure to uncertainty.

Gartner’s survey highlighted a prevalent anticipation of revenue loss due to uncertainty, signifying the urgency for a new approach.

What is Antifragility?

The core of an antifragile supply chain lies in a strategic mindset shift led by Chief Supply Chain Officers (CSCOs). Unlike traditional approaches like fortifying barriers against uncertainty, antifragile supply chains embrace it as an opportunity for learning, evolution, and adaptive capability development.

What do we generally do when an impending threat makes itself known? We manage the supply chain in such a manner as to withhold its stability and keep uncertainty at bay. This is usually done by practicing the following:

  • Creating an optimized plan.
  • Centralizing decisions.
  • Maximizing investment returns and minimizing costs.
  • Improving forecast and plan accuracy.
  • Accurately predicting future events and disruptions.
  • Operating a reliable and efficient supply chain.
  • Collecting and analyzing as much data as possible.
  • Closely controlling, monitoring and rapidly adjusting execution.

Tim Payne (Research Vice President, Supply Chain Research Group, Gartner) emphasized in the research that the inability to deal with uncertainty is often a result of the barriers that we erect in the face of it. This hinders the capacity to learn and innovate, keeping supply chains in a fragile state.

On the contrary, antifragile capabilities offer a roadmap for CSCOs to navigate uncertain terrains. These capabilities can range from decision processes to supply chain planning and demonstrate significantly amplified revenue gains in the face of uncertainty.

Strategies like dynamic decision processes, flexible ROI calculations, robust uncertainty assessment through experimentation, and strategic redundancy investments stand out as catalysts for success in an uncertain landscape. In the global supply chain industry, the traction towards antifragility is palpable. Gartner’s research highlights the imperative need for a shift from merely resilient to antifragile supply chains. This shift isn’t just a cosmetic change but a fundamental reorientation in how supply chains perceive and respond to uncertainty.

Antifragile Capabilities

Antifragile enterprises do more than identify risks and plan for how to respond if they occur. They inoculate themselves by creating low-level exposure to risk that enables them to practice responding to it and even game out how to exploit it for competitive advantage.

The research mentions that simulating risks within the organization provides greater knowledge of how to handle known unknowns (like cyber-ransomware and interest rate hikes) and also greater awareness of unknown unknowns (like how to handle whole countries becoming disconnected from the global supply chain).

The research also talks about a common misallocation of initiatives – more than half of surveyed respondents invest over 50% of their key capabilities in attempting to repel uncertainty. This overemphasis on building barriers prevents supply chains from becoming capable enough to face future uncertainties.

This is an abridged version of the Feature Story published in the December 2023 issue of Logistics Insider magazine. To read the complete story, click here.

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