Across industries, companies of all sizes are paralyzed in their strategic and investment decision making. In less than a decade, much of the conventional wisdom about global supply chains has been upended.
Supply chains developed during globalization in the 1990s were designed around maximum efficiency at minimal cost and refined over time to further reduce operating friction. Milestones such as 9/11, China’s joining the WTO, the 2007-09 financial crisis and the rise of direct-to consumer e-commerce hinted that frictionless systems were more vulnerable to external disruption. Covid-19 brought the message home full force.
Part of the design and planning foundation for conventional supply chains was a model developed in the late 1980s by U.S. Army War College strategists, VUCA, to explain built a model for making sense of the post-Cold War world in their planning and forecasting. The acronym predicted four strategic realities ahead: volatility, uncertainty, complexity and ambiguity.
These descriptions still apply, but have been ratcheted up by the volatility and supply-demand misalignment created by Covid, and have continued with climate change, geopolitical and trade conflict, cyberattacks, inflation and more.
A new model coined in 2018, BANI, describes the current global operating environment as brittle, anxious, nonlinear and incomprehensible. A new supply chain focus, then, must accept as a baseline the risks from seemingly random events and develop capabilities to manage what comes. Siemens Digital Logistics supply chain evangelist Juergen Schulz discusses the components of BANI and the technology, process and organization changes this new model will drive going forward.
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