It's been said so often that it's become a cliché: Marketplace volatility is the hallmark of the "New Normal" economy. Still, there's no denying that in a world where digital information spreads like wildfire, consumer demand swings in response not just to major events but also to developments that would have caused barely a ripple in the past. In other words, supply chain managers must be aware of everything from large-scale, disruptive geopolitical and meteorological events to the latest fashion trend.
To successfully respond to this next level of demand volatility, successful companies must go beyond operating supply chains that are flexible, agile, and resilient. Instead, supply chain executives will have to develop what I call "protean" supply chains that can rapidly alter their shape in response to marketplace changes.
A protean supply chain could change its operation without delay. It could quickly reorient people to new assignments. It could quickly recast its processes to align with new circumstances and retool its technology to help it master new marketplace conditions.
Let me give an example of what a protean supply chain could do. Suppose a company has segmented its customer base, providing different levels of service based on how profitable it is to serve each customer. Now suppose that an existing customer signs a new agreement to purchase the company's products that makes the customer more profitable to serve than in the past. As soon as that agreement is signed, a member of the supply chain staff changes the business rules in the warehouse management system (WMS) to give that customer the highest priority for the inventory in the distribution center. The "control tower" overseeing the flow of product from suppliers into the distribution-center network now redirects inbound shipments in a way that gives priority to the newly profitable customer. The manufacturing plant bumps up that customer's orders on the production schedule. Supply chain processes and composition have been altered. If the company can regularly adjust its supply chain processes as customer rankings shift, then that supply chain could be described as "protean."
Protean supply chains are the next stage in the evolution of supply chain management. Many companies are taking steps in that direction, although they may not refer to what they are doing by that name.
If you're interested in learning more about protean supply chains, you may wish to consult my new book, Protean Supply Chains: Ten Dynamics of Supply and Demand Alignment, where I discuss this concept in far greater detail. (For more information, click here.) Many of the topics discussed in the book have previously been discussed in this column, but the book fits them into a big-picture view of where the discipline of supply chain management is going in the decade ahead.
