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The Myth of the ‘Post-COVID Normal’ in Supply Chain

One of my Purdue engineering professors used to write “quod erat demonstrandum: Q.E.D.” on the blackboard after proving a particular equation or theorem.

The Latin translates as “what was to be shown,” per Wikipedia. Colloquially, it means “thus, it is proved.”

First, the blackboard tells you I was in college a while back. Second, as hopefully the rest of this blog points out, many commenting about the state of supply chain resilience today have not faced reality regarding “The COVID Effect.”

Each blog or article makes me want to jump out of my basement window.

“The Fading of the COVID Effect,” “Charting a Course Beyond COVID,” “Navigating the Post-Pandemic Landscape,” “Embracing the New Normal,” “Business After COVID” and “Reimagining Business as Usual” all postulate that we have an after COVID “normal.”

All imply a before COVID normal and a during COVD normal. Many miss the potential of AI in supply chain.

None fully embrace the fact that after the COVID-19 pandemic, there is no normal. Normal is gone. They have proven nothing.

For, as I have said many times, the new normal is disruption. Or, if you prefer, the new normal is abnormal.

The Unending Impact of Supply Chain Disruptions on Business

But, think about it, are any business topics approaching any level of normalcy?

Artificial intelligence, machine learning, automation, robotics and material handling are undergoing revolutions. The storm of generative AI has grown beyond ChatGPT.

Now, companies are looking to integrate specialized AI technologies into their supply chain operations and serve their customers. Material handling must integrate automation and robotics to meet customer expectations and preferences.

Digitization, digital enablement, digital transformation and digital supply chain networks are automating processes, improving efficiency and enabling new business models. For instance, digital supply networks allow real-time management of supply chains, enhancing responsiveness and flexibility.

Advanced analytics and AI are disrupting forecasting, planning, sales & operations planning (S&OP) and integrated business planning (IBP). More accurate and timely forecasts lead to better supply chain planning, inventory management, decision-making and procurement strategies.

The yin and yang of globalization and deglobalization are forcing companies to search for nearshoring, reshoring and friendshoring options. These strategies are reshaping international trade and global supply chains.

Omnichannel inventory strategy and management are becoming essential, enabling companies to better match supply and demand and avoid stockout situations.

Labor availability and costs are becoming even more critical restraints.

Companies are responding (or, in too many cases, fighting against) remote and hybrid work models. These models break down geographical barriers, enabling businesses to tap into a global talent pool. This results in greater diversity and expertise within teams. Labor on demand services also play a role.

You can list umpteen other issues that have not and will not approach normalcy:

  • Innovation, strategy, technology, creativity, business intelligence and insightful leadership.
  • Manufacturing, cellular, agile, additive, on demand and IoT
  • Reverse logistics, sustainability, circular economy, ESG and remanufacturing
  • Sourcing, outsourcing, risk management, procurement, agile supplier management and collaboration
  • Transportation, first mile, middle mile, final mile, white glove, drones, PUDO (pickup/drop-off)
  • Warehousing, distribution centers, fulfillment centers, micro, omnichannel, B2B, B2C and eCommerce

The 3 “Normals”: Before, During and After COVID

From my perspective, the normal before COVID was based on working in a steady-state world with an occasional surprise.

Sales forecasts were correct, plus or minus 10%. Trucks, ships and planes were on time.

Holiday peaks and customer demand were fairly predictable. Labor, space and capital were all available. Supply chain technology made steady incremental improvements.

The normal was more or less business as usual. That was changing, as I noticed VUCA (volatility, uncertainty, complexity, ambiguity) increasing in 2019. But businesses could profit and supply chains could deliver “normally” throughout the global economy.

A Failure to Navigate – eCommerce, 2020 and COVID

Then came spring 2020. A virus about 1/1000th as wide as a human hair rained exponential death blows upon populations, manufacturing and logistics during the early months of 2020. COVID exploded VUCA from a growing concern to an explosive force that shut down much of the world.

During COVID, the normal was that nothing worked. Previously undreamed supply chain risks became supply chain reality.

Supply was unreliable. Demand was out of control. Inventory levels cratered. Stockouts increased. Predictive analytics was useless. Lead times fluctuated wildly. Advance notice didn’t exist.

The stay-at-home economy skyrocketed demand in many categories, especially consumer goods. Other categories virtually disappeared. Kids didn’t go to school, and parents did not go to work. Most events, travel, vacations and even birthday parties were cancelled.

Consumer demand exploded the pressure on eCommerce, and companies could not deliver up to customer expectations. Our supply chains failed.

For the Future, the Past May as Well Be Nonexistent

Now, years after the world opened up and supposedly returned to “normal,” nothing about before COVID or during COVID is relevant.

Supply chains designed before COVID have been in constant disarray. Many organizations still try to deploy people, processes and technologies designed for smooth seas instead of today’s Category 5 hurricane. Shooting wars, trade wars, climate change, deglobalization, nearshoring, reshoring, friendshoring, droughts, floods, storms and fires, business failures, greedflation … the hits and long-term disruptions just keep coming.

All these articles and blogs discussing how we are “returning to normal” after COVID miss the point. The fact is, we must solve problems differently. Many don’t identify potential solutions, solutions that are AI-powered.

Optionality Is the Path to Supply Chain Resilience

Everything we do with supply chain must be reinvented to handle the new normal – which is perpetual disruption. Deploying people, processes and technologies the same way we did five years ago does not work.

Everything must change. Then we must change some more in response to continuing disruption.

We must even change our approach to problem solving. Five years ago, we defined requirements and tried to optimize our processes and supply chains. Now, with nonstop VUCA, we cannot define requirements. They will change five minutes from now.

Instead, optionality is the key word for today and in the future. Optionality allows enterprises to index their solutions to a range of possible requirements. When requirements change, as they will, you can adjust your solutions.

Businesses that want profitable growth and competitive advantage must continually adjust requirements as solutions continually change.

The same can be said for innovation. The before-COVID normal required major innovations every few years. Today, with disruption the new normal, you must discover and deploy major innovations every few quarters.

The New Reality, or Building Resilience in Future Supply Chains

Visualize your supply chain challenges as complexity under control.

No, this is not easy. If you are using the same tools and processes you were five years ago, trying to control today’s complexity is impossible.

So, how do we survive? How do we prosper? How do we move forward when tools we used in the ancient times before COVID and during COVID do not work?

Clearly, we need new tools. What is the answer to the “new tools” question? As alluded to above, artificial intelligence.

AI did not become the solution of the day because AI tools were all of a sudden ready. Heck, researchers have been developing AI tools for over 50 years. AI tools became the solution of the day because when normal means perpetual disruption, we have no other ways to solve our problems.

Yes, some supply chain pros have been using artificial intelligence-powered tools, particularly digital supply chain networks, before COVID. But their application was not as widespread until the needs of the after COVID “normal” became clear.

Now, AI is transforming workplace safety in warehouses and factories. AI is essential for warehouse management systems. AI is transforming supply chain finance beyond the big banks. And yes, through digital supply chain networks, AI is benefiting end-to-end supply chains.

Deploy AI or Get Lost in Supply Chain Complexity

Some of you may be getting tired of reading about AI, AI, AI.

Get over it. Because AI is the solution of the day, week, month, year and decade.

You have two choices: Deploy AI or be gone. The after COVID normal of VUCA can only be addressed with the power of AI.

Therefore, the conclusion to this blog is: VUCA requires you to handle complexity under control. This requires innovation. Artificial intelligence-powered tools are that innovation. Q.E.D.

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