In this VUCA environment? Very!
Almost one year to the day has passed since we wrote, “nothing has really changed – commercial acumen is still the weapon of choice in the war against uncertainty.”
At EPSA we are quite certain that you have noticed the volatility, the uncertainty, the complexity, and the ambiguity that defines business environments, the global supply chain landscape and to a degree, life itself.
Later, in that same Industry Trends article, we went on to affirm that the value proposition of commercially astute supply chain and procurement professionals is defined by the growth and value they bring to a business over the medium and longer term. But rather than try to define what may be right and what may be wrong with the world, in this Industry Trends article, we will explain why supply chain and procurement professionals are more valuable than ever in a VUCA commercial ecosystem.
Understanding VUCA
OK, before we progress too much further let’s quickly define the term VUCA. It is an acronym that found its origins in the US military in the nineties.
Here is a definition:
- Volatility – this refers to rapid and unpredictable change in your world of commerce. There are many drivers and causes, each of which are defined by instability or wild swings in demand, supply or circumstances.
- Uncertainty – following on from the last point, this arises from the unpredictability of regulatory changes, markets and requires detailed analysis, risk assessment, planning simulations and more.
- Complexity – we’ve never been more connected, more isolated (in respect of our ability to work and operate independently or remotely) or more exposed to the intricate webs and threads of networks and relationships between partners, suppliers, stakeholders, customers and clients, and everybody in between – the lines between whom are blurred by even more information, access and technology.
- Ambiguity – the problem with data is that it can offer a clear view of two (or more) conflicting positions, conclusions or points of view. There’s that old saying, “if you torture numbers long enough, they’ll tell you anything.”
So how did we find ourselves in a VUCA commercial environment? Well, the usual suspects are all here and there’s plenty of blame to go around. Economic undulations, geopolitical upheaval, natural and less natural disasters all contribute to a complicated economic and operational ecosphere for supply chain and procurement professionals. And that’s to say nothing of the people involved in various aspects of prognostication, analysis and decision making that affect us all.
What is needed to navigate today’s VUCA world?
Well, that answer could take up an entire Industry Trends article by itself, but here are three points to consider:
- Robust and forward-thinking strategies aimed squarely at growth and thriving. Side note, if you’re thinking about mere survival, the game is already over, or will be in a few quarters from now.
- An implementation plan that doggedly pursues resilience and increased agility.
- Effective risk management and contingency policies, planning and protocols.
Here’s what your supply chain and procurement professionals can deliver
It’s in the seams and the cracks of VUCA that the trained eye, the experienced operator will uncover rich veins of insights, ideas and opportunities.
- As VUCA environments established themselves as the new(er) normal, business will come to lean more heavily on supply chain and procurement professionals to navigate the way forward.
- Smart and timely investments in the tech and data analytics, embracing AI to harvest and sort huge tranches of value rich data.
- Enhanced end to end visibility of process to help predict potential disruptions in real time, if not ahead of time.
The ability to cultivate and cement collaborative relationships. Observing the tariff-based machinations of the most recent iteration of the Trump administration has taught us that being on the inside helps avoid being left out in the cold. This is not just a US based truth, it is a universal one. The more (contacts) you know, the more answers and opportunities you’ll be able to leverage.
OK, since we brought it up, let’s talk Trump tariffs…
Just when you thought it was safe(r) to try to define and operate in normalising conditions, triple T hit us all hard. Trump’s tariffs and trade war has shaken the commercial ground beneath us in at least two clear and impactful ways.
- Extraordinarily high tariffs have really muddied the forecasting waters, pausing orders as “wait and see” mode kicks in leading to decreasing transport rates among other outcomes.
- Strategies are shifting, some to avoid the United States and its potential double tariff hit. In at least two cases we know of, that involves going around the United States and dealng directly with destinations in North and Central America.
At the centre of it all is the ability to accurately forecast demand and effectively strategise the best routes to market. Now, as the Trump administration and its contribution to a VUCA environment has shown, just when you think you have the answers, they change the questions. The proposition of a supply chain and procurement professional lies in part in the innate ability to understand, strategise, plan, and guide your organisation through VUCA waters while protecting and propagating growth and resilience.
Optimistically speaking, we’ve endured the worst of the current wave of tariff irregularities, and it was the supply chain and procurement professionals that helped get us this far. The value proposition of these professionals will undoubtedly see our industry through the ensuing chapters of change as well.
