Lessons from the desert for the future of supply chain resiliency

The Sonoran Desert may seem like a hostile environment, with as little as 7cm of annual rain and scorching sun that can reach 47°C. Yet plants, animals and even people can thrive in this environment with resourcefulness and adaptability.

The mighty saguaro cactus can grow to be more than 21 metres tall and live to be more than 200 years old, but it grows as little as 2.5cm in its first 10 years. This slow start to life begins under ‘nurse’ plants, which provide protection from the sun and predators. As it matures, saguaros in turn become ‘nurse’ plants for woodpeckers, owls, hawks and songbirds, which all use them for nests.

Just as the saguaro is both nursed by and supports life in its ecosystem, supply chains in business can invest in their ecosystems of suppliers and employees. The future of the supply chain brings new risks and challenges, along with the recognition that doing things the same way will no longer lead to the same success. We must adapt now to survive.

Ford Motor is investing in domestic battery production and Unilever’s Partner with Purpose scheme seeks to extend its ecosystem by building capacity in suppliers in emerging markets. Only 27 per cent of supply chain leaders say they have the talent they need for their current challenges, but the leaders are those in this minority, who are upskilling the talent they have for the future.

Have your day in the rain

While lack of rain may be what comes to mind when you think about the desert, the bigger challenge is its variability. In some years a single storm can dump 50 per cent more rain than in previous years. Plants such as the ocotillo may look like dry sticks much of the year but have learned to seize the day when it comes and can sprout leaves within 72 hours after heavy rain. Desert plants and animals have all kinds of interesting adaptations like this to capitalise on rain when it does fall.

It may feel like stormy times for the supply chain right now, but not all rain is bad. Having a ‘day in the sun’ means being noticed and appreciated, but in the desert, we might call it a ‘day in the rain’. As supply chains are being discussed at board level and on earnings calls, we are having our moment in the rain. Like the ocotillo, we need to take advantage of this moment to grow.

Now is the time to showcase the competitive advantage supply chains bring so we can increase the investment needed to deliver those results. But to operate at board level, we need to be able to speak the CFO’s language. Supply chains must be connected and collaborative so all links can align to business strategy and oriented towards a common set of the most important metrics (and not functional metrics that drive siloed behaviour). This alignment will drive the results that get the CFO’s attention and are reported in the board room and on earnings calls.

Spike up to protect against attack

The desert is famous for spikes and thorns, which make it seem like a threatening place. In fact, this not only prevents water loss by minimising surface area for evaporation but also prevents predation by most creatures. Animals that try to take a bite out of a cactus will get bitten back by those thorns.

Existing security protections are not enough, so supply chains need to sprout sharp spines to fend off the growing threat from cyber-attacks, which the European Union Agency for Cybersecurity (ENISA) estimates will quadruple this year. Attacks can move quickly due to their cascading effect on supply chains, so the risk of damage to the business and customers is high. As IT and OT converge, when smart factories pass data back and forth to the supply chain, the attack surface grows. ENISA cites the biggest risk from suppliers’ code, but data and internal processes are also a risk . Heightened investment in cybersecurity is critical to prevent the supply chain from going down.

Shift from ‘just in time’ to ‘just in case’

Many desert plants are categorised as succulents, which means they are thick and fleshy to help them absorb water quickly and lose it slowly and carefully. Given the aridity and variability of rain, they must be able to store water and conserve that hoard carefully. However, storing water just in time isn’t enough; succulents possess additional adaptations to help minimise water loss, such as a special water-efficient form of photosynthesis that also allows them to slow down their metabolism during droughts. These protective mechanisms are essential for survival and mean they will have water if the skies don’t open again for months.

Supply chains have ridden the wave of lean practices and just-in-time inventory for years, but the money saved comes at a cost of flexibility and supply chain resiliency, a price paid dearly during the pandemic. The decreased appetite for supply chain risk and hunger for greater resiliency mean inventory strategies must adapt to new ways. The future of the supply chain includes a return to dual-sourcing and other practices of redundancy to mitigate risk, but buffers don’t have to explode.

Concurrent planning can allow companies to activate capabilities such as agility and transparency to prevent stockouts while not building up excess inventory, as global bio-pharmaceutical manufacturer Ipsen has done.

Reduce waste and aim for circular, not linear, designs

The Hohokam thrived for nearly 1,500 years in the Southwest until just before the arrival of the Spanish, because they were masters of the desert. In this arid climate, they created a fertile agricultural region that supported tens of thousands of people. They wasted nothing, using many parts of plants and animals and engaging in sustainable agriculture by rotating crops and managing soil to replace lost nutrients.

Most supply chains today are linear, starting with raw materials we make into products and then discard at the end of their life. Moving toward a circular supply chain means finding ways to reduce (like Jabil’s multifaceted efforts to use less packaging), reuse (such as Cisco’s Takeback and Reuse Program), and recycle (such as Procter & Gamble’s commitment to use all reusable or recyclable packaging by 2030). These kinds of shifts towards a circular economy can save costs and even generate revenue. But more importantly, they increase resilience by mitigating the risks from climate change, which the McKinsey Global Institute predicts will be more significant than the pandemic. Reducing reliance on scarce raw materials, reusing existing materials and recycling those at end of life alleviates strain on sourcing in a constrained world.

The future of the supply chain can be full of blooms

The trends driving the future of the supply chain will not be easy to tackle, so now is the time to invest in digital transformation to adapt to new risks, as well as new opportunities. The future we face may seem threatening, so it is wise to look to systems that have survived under what seem to be hostile conditions. The desert is a master model of resilience. We, too, can learn to bloom in surprising places.

See how Kinaxis is helping its customers maintain a sustainable supply chain at kinaxis.com

By Polly Mitchell-Guthrie, VP of Industry Outreach, Kinaxis