SCM in a VUCA World: How Companies Tailor Their Approach to Solving Pandemic-Related Problems

New times call for new rules – but what can organisations do when there isn’t a well-defined set of rules for every industry and situation? Furthermore, how can companies adjust to the complications brought by a VUCA environment? Now, before we get to the gist of this subject, let’s take a step back and try to understand what a VUCA world even looks like.  

What does a VUCA environment look like, and how can it affect companies?

An acronym for Volatility, Uncertainty, Complexity, and Ambiguity; The US army used it to describe the post-Cold War environment in the 1900s. 

Fast forward to the modern-day, business leaders such as SCM / C-level executives have picked up the term to describe the current market situation and re-think their strategies in solving problems. Here’s a closer look at the VUCA characteristics and specific examples that apply to supply chains, especially during the pandemic: 

Volatility 

This refers to unpredictable and fast changes in an industry or organisation. In the case of the pandemic, volatility can refer to the ever-changing demands for tech solutions. Companies have to figure out what types of integrations they should include in their process to improve resilience. 

One example of this would be the integration of the supply chain mapping tool of the Green Anchor Group, Ltd. – a company that supplies heavy metal machinery. With the Covid regulations in PRC their usual means of scouring the country for supplies wasn’t working anymore. As a solution, they moved on to using the Asian Development Bank’s supply chain mapping tool. It helped them find critical manufacturers and suppliers of PPE, speed up their process, and cut their costs.  

Uncertainty 

While change is inevitable during challenging situations, it’s virtually impossible to know the results. An excellent example of this VUCA characteristic is the future impact of the pandemic. While we may now be seeing the immediate effects of the pandemic, such as disrupted supply chains and shortages of input, the rest of its long-term consequences remain largely uncertain. 

The pandemic remains a problem in various countries across the globe, and there’s no way to tell how long the infection will continue to spread. In fact, it continues to wreak havoc and put undue pressure on supply chains because of the threat of the new variant – the Omicron. 

CNBC notes that the new COVID-19 variant might cause new problems for supply chains. According to their report, China will most likely stick to its dynamic zero-COVID policy, which can lead to the following:

• Shipping and logistics delay because the country has the largest container port in Ningbo   
• Port congestion fluctuations which can also contribute to vessel delays
• Increased shipping rates as a result of air freight restrictions and additional logistics challenges

   

Complexity

The COVID-19 pandemic has caused a laundry list of complications for supply chain management organisations and functions. Here are some examples of these complications, according to the White House publication: 

• Some companies can’t hire quickly enough to cope with the increased demands of customers
• Several businesses struggle to maintain their production because of supply shortages and delay in logistics
• Inventories of cars have reached record lows, affecting industrial supply chains
• Some companies, especially those in automotive and retail have very little inventory to sell, causing the inventory-to-sales ratios to plummet.

   

Ambiguity 

Like what we mentioned earlier, there isn’t an established set of rules for every industry or situation. As a result, some organisations are left clueless about what they should do. 

During the pandemic, plenty of supply chain organisation leaders were shocked by the sudden implementation of tightened travel restrictions. In China, this resulted in a massive backlog at major ports. Meanwhile, this caused a shortage of truck drivers in India, which eventually led to 500,000 container trucks getting stranded in Chennai.

How should leaders step up to the challenge and change their approach?

Changes are happening in a faster and more pervasive way because of the situations created by the pandemic. Because of that, leaders have to adapt and restructure their approach with a VUCA standpoint in mind. Below are examples of how leaders and companies navigate through the challenges in a VUCA environment:

• Countering volatility with concrete data, vision, and flexible plans 
• Training team members to provide insightful information instead of general data points
• Creating alternative plans for various situations
• Sharing your company’s mission to help the team to stay focused and motivated
• Resolving uncertainty by learning as much as you can about the situation 
• Getting a fresh and innovative perspective from every member of your team
• Reprioritizing work and utilising agile teams to update organisation priorities – similar to the approach used by SWIFT, a member-owned cooperative based in the UK. 
• Glancing back on the sources of errors or mistakes and looking ahead to find potential solutions
• Managing complications by eliminating misinformation and opting for a collaborative leadership
• Making sure that everyone is on the same page by having a communications guideline
• Training peers to stay calm and relaxed, especially in highly volatile situations 
• Fighting ambiguity with adaptability and creativity 
• Explaining the purpose of the changes or adjustments that your company has to undergo (such as salary cuts, marketing budget changes, etc) to your staff
• Practicing active listening, especially when communicating with members and stakeholders
• Staying open to suggestions from your staff
• Taking advantage of talent solutions available in the market

   

Living in a VUCA World: Be Overwhelmed or Choose to Accept and Manage the Situation

Managing and solving problems from a VUCA standpoint is indeed a challenging feat. It’s also uncharted territory for most of us working in SCM and procurement. That’s why having a great team of professionals trained to work in volatile and unpredictable environments can help you boost your company’s competitive edge. Having top-notch SCM talents onboard can also come in handy in navigating through new challenges. 

Let our team of SCM recruitment professionals help you source talents for your organisation. We take pride in our extensive database of SCM talents in APAC, relationship-driven approach, and customised engagement models. 

Learn more about our executive recruitment services for SCM functions today! 

Ananya Sinha Roy is the Director at The Supply Advisory (a division of Datasearch Consulting), a leading executive recruitment firm specialising in Procurement & Supply Chain.

You can view the The Supply Advisory website or contact them directly at info@supplyadvisory.com for a more detailed discussion.