Restructuring and Building a Resilient Supply Chain
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Restructuring and Building a Resilient Supply Chain 14 th May 2020
Transcript of Restructuring and Building a Resilient Supply Chain
Restructuring and Building a Resilient Supply
Chain
14th May 2020
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Introduction
• Leventis Foundation Nigeria Ltd/GTE (LFN) is an organizationthat has been executing agricultural training for youths andfarmers since 1988.
• 6 Schools in the different agro-ecological zones of Nigeria,located in FCT, Osun, Ondo, Kaduna, Kano and GombeStates.
• The Foundation has trained over 25000 youths and farmers,employing a deliberate practical training approach that helpsthem transition to a more profitable farming experience.
• The Foundation also leverages her strength throughpartnerships with other institutions.
Who is your speaker ?
Development & Strategy Office, Leventis Foundation Nigeria. Sheis an Agribusiness Expert providing business strategy,development & technical support to producers, traders &exporters, empowering them for international trade and globalcompliance. She also works with stakeholders in the private andpublic sectors to lobby and advocate for the adoption andimplementation of food production/safety policies andregulations that will enhance agricultural trade and investment inNigeria.
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Supply Chain
A supply chain, is a vast and complicated network.
Companies source product from suppliers, who might sourcematerials or components from others, who in turn mightsource from others. When one part of this network is exposedto risk, all parts are vulnerable to disruption.
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Supply Chain Resilience
• It is increasingly accepted that supply chains in allforms face increasing volatility across a range ofbusiness parameters from energy cost, to rawmaterial availability and currency exchange rates
• Ponomarov and Holcomb (2009) define supplychain resilience as “the adaptive capability of thesupply chain to prepare for unexpected events,respond to disruptions and recover from them bymaintaining continuity of operations at thedesired level of connectedness and control overstructure and function”
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Resilience vs Sustainability • it is important to provide clarity on the relationship between
resilience and the similar terms of “sustainability” aresometimes used interchangeably.
• Using the definition of sustainability outlined in theBrundtland Report: “meeting the needs of the presentwithout compromising the ability of future generations tomeet their own needs”, sustainability can be described as anormative measurement for assessing long-term performanceagainst ideal environmental, economic and social standards.
• resilience is more of a descriptive methodology concerningshort-term ability to withstand and/or adapt to disturbance.
• It is a key attribute for any organisation with long-termsustainability goals.
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Agri-food supply chains (AFSCs)• Agri-food supply chains (AFSCs), include all steps involved
in production, manufacturing and distribution of food untilits final consumption, not only share these general risks butalso face their own unique vulnerabilities due to the limitedshelf life of food, and variability in quality and availability ofraw materials.
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Agricultural Supply Chain
Resilience the focus of every attempt to enhance resilience in agriculturalsupply chain should concern the unbroken flow of safe andappropriate food to end consumers in the face of disruption
How can the multidisciplinary concept of resilience be applied to AFSCs?
AFSC resilience:
• The collective ability of Agri-food supply chain stakeholdersto ensure acceptable, sufficient and stable food supplies, atthe required times and locations, via accurate anticipation ofdisruptions and the use of strategies which delay impact, aidrapid recovery and allow cumulative learning post-disruption.
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Resilience Elements
• Elements of resilience can be categorized by phases.
• READINESS – elements that assist in monitoring changesto the operating environment and those which, while beinguseful in later phases, must be built in in advance.
• RESPONSE PHASE – Elements in the Response Phase focuson mitigating the impact of disruption and helping tomaintain functionality.
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Resilience Elements
• RECOVERY PHASE – Elements in the Recovery Phase areorientated towards minimising the time needed to restoreany lost functionality and enabling adaptation at anoperational level (such as accepting new ingredients ordistribution routes)
• ADAPTIVE PHASE – alignment of core values with an ever-changing operating environment. Therefore, adaptivephase elements concern the ability for long term, systemwide, adaptation, perhaps significantly affecting corefunction, in response to changing operating environments.
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“resilience-enhancing principles”
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• Maintaining the diversity and redundancy of systemcomponents for example maintaining multiple types offarmers, processors, and/or distributors in a particularvalue chain. Provide substitutes for components that mayfail in the face of a disturbance.
• managing the connectivity between components canfacilitate flows and constrain the spread of a disturbance
• Identify and manage the key variables and feedbacks thatinteract in order to determine the configuration of asystem. This builds on the first two principles, asconfigurations will depend on the patterns of change thatsystem components are undergoing,
“resilience-enhancing principles”
• maintaining the flexibility of components to take differentpositions and adapt operations to changing requirementswith minimum time and effort. Flexibility can be linked tothe diversity principle, because it is created when valuechain actors depend on a diverse portfolio of humanresources, products, suppliers and buyers, and incomesources
• One example of flexibility through diversity is theestablishment of a combination of short and long chains ina given market is maintaining a redundancy of value chainresources that perform the same function in the valuechain
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Benefits of Resilience • First, where resilience strengthens a value chain’s ability to
tolerate and operate in uncertain environments, it canenable it to seize entrepreneurial opportunities byproviding food products to market segments in which thereis unmet demand.
• Second, where resilience is a unique capability that abusiness or value chain has developed and where itimproves the marginal welfare of consumers, it can be asource of competitive advantage in a given market.
• Third, by enabling a value chain to prepare for uncertaintyand mitigate its impacts, resilience might reducetransaction costs and the risks of exploitation within thevalue chain.
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Resilience of what ?
• The first part of the assessment focuses on understandingthe value chain services for which one wants to buildresilience: “resilience of what?”
• You have to define and describe the boundaries, services,and key components and institutions of the value chainsystem. The first step is to map out the structure of thevalue chain system.
• Essential pieces to include in the mapping are value chainsegments, stocks and flows of resources (e.g. Inputs,information, products, money), institutions, and importantnested systems with which the value chain interacts
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Resilience of what ?• Next, identify and describe the essential services generated
by the value chain. This identification should includemarketable products and services, especially rare attributesthat meet particular customer needs and which form thebasis of the value chain’s comparative advantage and itseconomic sustainability.
• However, you should also consider the broader role thatthe value chain plays in food security for particular groupsof people, and identify other essential services (e.g.,employment, multiplier effects on other value chains)provided to other stakeholders.
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Resilience of what ?• Lastly, participants identify the value chain system
resources that are essential to providing these services andbenefits, and the rules that are in place to govern them.
• The resources and rules that are identified may highlightcomponents and institutions that were previouslymentioned, or introduce new ones.
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Resilience to what ?• identify and describe the major types of supply and
demand disturbances that threaten the value chainsystem’s essential services and explore their causes andeffects.
• You do this by reflecting back on actual disturbances thathave occurred in the past ten to fifty years, then byimagining other disturbances that could likely occur in thefuture.
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Build resilience
• identify and describe the resilience-enhancing principlesthat are already being employed (if any) to addressdisturbances, and analyze their effects on resilience andother dimensions of value chain performance
• consider other resilience-enhancing upgrades that could beimplemented.
• For each upgrading option, you should thoroughly assessthe effects on other dimensions of value chainperformance, the potential synergies and counter-vailingrelationships between the upgrading options.
• You must assess which value chain stakeholders are bestpositioned to implement these upgrades, and how thecosts and benefits will be shared in an equitable manner.
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Build resilience
• To these ends, the information and findings emanatingfrom the assessment can be used as an input for businessstrategies, or leveraged to design future research, organizeadditional stakeholder meetings, conduct advocacy, orpetition for project funds.
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Effects of Building Resilience
• Building an appropriate level of resilience will sometimesrequire the value chain to make significant capitalinvestments or operational changes that increase the perunit cost of its marketable goods and services.
• Value chain stakeholders should rigorously assesscustomers’ willingness to pay for the increased resiliencevalue.
In cases where the market is not ready to compensate forthese added costs, the value chain can consider developingcommunication and marketing strategies aimed at influencingpreferences towards more sustainable consumption.
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Agricultural Supply Chain
Resilience• Yes, in many works, the priority of resilience is oftenorganisational competitiveness. In addition to that, the goalfor any actor or stakeholder in the agriculture or agri-business, should be food security
• At Leventis Foundation Nigeria, we can be of service to youin strengthening your supply chain and develop acomprehensive resilience implementation “strategy” foryour agri-business.
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You can do it.
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LEVENTIS FOUNDATION NIGERIA
• No. 2 Leventis Close opposite Fraser Suites, Central Business District, Abuja.
• www.leventisfoundationnigeria.org.ng
• +234 808 898 0288
