To understand the effectiveness of the SI5ES, it is vital to look at each of its six phases of initiation.
Phase 0: Define the strategies - The purpose of this phase is to understand the relationship of catastrophe preparedness to corporate strategy, business planning, competing priorities, pricing and other core initiatives. Some key considerations include: who are the key customers, what is the key local market landscape, what is the collaborative environment the company lives in and what is the time horizon of a catastrophic event.
Phase 1: Understand the big picture - Supply chain zones are typically characterized by a coherent set of operating assumptions regarding the availability and flow of product and services. Additionally, they are often organized to minimize reliance on other zones. Relationships within a zone are functionally and contractually organized around these assumptions and their expected persistence. In the geographic region impacted by the potentially catastrophic event, it is important to understand:
- How have the pre-event assumptions been changed by the potentially catastrophic event?
- Do the zones involved have sufficient strategic capacity to recover and potentially redirect local capabilities?
Phase 1 defines the pre-event distribution network strategy, builds a comprehensive model to understand the interdependency and determines cost, price, and margin implications.
Phase 2: Analyze supply chain zone, hubs and sites - The core of every zone consists of hubs, which equate to the principal nodes of the supply chain network. Determining the strategic capacity of each individual hub involves understanding:
- what processes are accomplished;
- what capabilities exist;
- what interdependencies facilitate the processes and capabilities;
- time sequences and sensitivities related to processes, capabilities and interdependencies for each hub.
This supply chain preparedness methodology differs from others in that it focuses on the fundamentals and on the role of the lead component. Traditional problem solving steps include gathering, analyzing and synthesizing. Engaging these fundamentals by subject area—such as infrastructure, process and people—establishes an overall preparedness framework by zone. Secondly, a supply chain preparedness framework is generated by fixing a lead component—something that needs to be considered as a given or a constraint. Analyses of each subject area are then integrated to develop an overall hub picture.
The methodology ties all subject areas and their concepts together. Infrastructure is the hardest and most tangible subject and pivotal analysis is performed around it while people and process are tied in. Ignoring one or all aspects is a common mistake and results in less than optimal preparedness.
In case of a catastrophe, it is important to identify which supply chain characteristic is most likely to present the greatest constraint: infrastructure, processes or people?
While developing the analysis for a network hub, it is critical to identify how sites mature with time. While the traditional role of the sites is to provide value-added activities—such as late-stage order fulfillment with improved demand data—they can also be a buffer against uncertainty in supply performance. Uncertainty can involve demand volatility which requires an effective respond/recover strategy as well as supply chain redundancy/resiliency. Such redundancy is a critical consideration especially during start-up stages and for longer-term resilience.
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Phase 3: Identify supply chain resilience priorities for zones, hubs and sites - Based on the emerged understanding from the prior phases, how can one describe the strategic reality of the zones and hubs? The key is to apply the strategic frameworks developed as a part of phase II and add more detail. At this phase, this translates into the slotting plan for the picking area. What does this process expose in terms of assumptions, expectations and mitigation opportunities?
During Phase three, it is imperative to define the requirements which will achieve your end-state goals. This is followed by a careful exercise to pare down requirements, resulting in a simple working model, while concurrently enabling significant resilience without sacrificing cost and service. Engineers or supply chain practitioners can easily overload features, functions and details that add complexity. Beware of the temptation to over-complicate details as it could increase the likelihood of cascading failure in case of potential catastrophe.