THE LETTER FROM FRANCE SUPPLY CHAIN #31 - November 2022

Supply chains are constantly managing unstable balances. But since 2020, they are facing real shocks: Brexit, pandemic, blocking of the Suez Canal, war in Ukraine, departure from Russia for some companies, repeated confinements in China. All this with the consequences we know: crisis of electronic components, energy prices, raw materials, transport, etc., which reveal inadequacies and weaknesses.

It is in this context that the Minister of the Armed Forces recently asked the players in the Defense Industrial and Technological Base (DITB), including the aeronautics industry, via the Direction Générale de l'Armement (DGA), to prepare to produce more equipment faster.

But how to do this, when new issues emerge due to the rebound of civil aviation, the dual nature of highly internationalized production chains (civil/military) and the lack of skills?

We could also - in a not so distant future - no longer have the required raw materials, for geopolitical reasons (pre-emption by a State), ecological reasons, or regulatory reasons (no more water, no more minerals, no more titanium...). In addition to all this, there is the issue of information system security, as cyber attacks have become the rule.

Crises no longer follow one another, they overlap. The next world is increasingly complex and unstable. We have to become "super agile", to go beyond resilience (which in physics is only the absorption of the shock).

Operations and Supply Chain are on the front line of this new economy. But are they ready? The question may seem provocative. However, it is unavoidable. It is only the synthesis of many questions that are emerging. The complexity of the answers reveals the many challenges that Supply Chains face:  

1. Do you know how to identify and interpret weak signals ? This is the first step, to anticipate hazards, to bring them up in a risk analysis to interpret them.
2. In some industries, the risks identified two years ago (when the risk management plan was renewed) are almost all proven.
3. Do you know who you can count on? customers, suppliers, employees, partners, the state?
4. Do you have the will to 'super collaborate' and are you ready to take the plunge? Sharing of skills, means of production, transport, transmission of critical information.
5. Have you prepared for crisis governance? Shortening of decision circuits, a single decision-maker, arbitration rules, ultra-fast communication/dissemination of decisions for powerful and agile execution.
6. Will you be able to "cut" your systems, or isolate them? work in rustic mode (let's say it: paper, pencil, phone...), Secure the "extended digital".
7. Have you defined your priority customers, those who will ensure your future survival, and the others?
8. Will you be able to review your production rates quickly, reconfigure your production and distribution scheme, change suppliers at the snap of a finger, and accelerate qualification processes?
9. Do you know how to change your BOM if a material is missing?
10. Have you done stress tests? with a digital twin of your supply chain .Your "Time to survive", and your "Time to recover" estimated according to the scenarios [1].
11. Have you cleaned up your data? the good ones, the outdated ones? What about governance, uniqueness, quality, etc.?
12. Finally, do you have enough cash in front of you? It is, whatever one says, the nerve of the g...

There are many other critical questions depending on your industry and its supply chain characteristics. The fundamental question is whether your company is sovereign, i.e. in control of its destiny, with its partners, to face a more complicated world.

[1] These are literally the times of "survival" and "recovery/healing". For more information: https://hbr.org/2022/10/fixing-the-u-s-semiconductor-supply-chain