Prioritization in supply chain: delay, delegate or do?

Today’s supply chain disruptions demand a great deal of attention, but supply chain executives have so many other issues – such as digitization and sustainability – to deal with. How on earth can they set the right priorities? The members of the SCM Directors Club Netherlands discussed this challenge together during a recent online session. The Norwegian company Mustad soon realized what its top priority was during the pandemic: to align supply and demand.

By Marcel te Lindert

Many supply chains are still suffering disruption due to COVID-19. The various lockdowns have led to shortages of parts, containers and labour, plus businesses are struggling to cope with multiple bullwhip effects, rising fuel prices, sky-high inflation and sometimes even a recession. Companies can arm themselves against such disruptions by innovating and digitizing their supply chains, making them agile and more sustainable, and improving their end-to-end planning processes. But where should they start?

Martijn Lofvers, Chief Trendwatcher at Supply Chain Media, advised the supply chain directors to use the Eisenhower Matrix to assess the importance and urgency of each issue. There’s no point in wasting any time on an issue that is not important and not urgent, and urgent but unimportant issues can be delegated. “If an issue has low urgency but high importance, then you should schedule it in. And if it’s both urgent and important, then you should tackle it immediately,” explained Lofvers.

Focus on key markets

Mustad – a Norwegian family-owned manufacturer of horseshoes, horseshoe nails and related products, with seven factories worldwide – is one company that already uses the Eisenhower Matrix in practice. In 2019, Mustad launched a transformation programme to prepare the company for the future. “In some regions, besides farrier products, we were also doing things such as fencing or vineyard tools. That distracted from our core business, so we decided to focus on a few key markets and key products,” said Diederik Schneemann (pictured), who up until recently was Director of Supply Chain & Purchasing at Mustad.

At the same time, Mustad adjusted its corporate strategy, reducing it to a clear and concise core message for all levels within the company. Schneemann: “We adapted our management structure and gave everyone the right decision-making authority. We supported this with a digital roadmap.”

Right decisions

Then in the midst of the transformation, the pandemic broke out. “Like everyone else, we immediately scaled back our production capacity, reduced our costs and reviewed our investments to ensure that we could still meet our financial and other objectives. Additionally, we accelerated the completion of the leadership training programme so that all the operating companies could take responsibility for their own decisions as much as possible, and that definitely paid off,” continued Schneemann.

At the central level, the company directly tackled one important and urgent issue: the alignment of supply and demand. “We immediately focused on the availability of steel. We wanted to avoid running out of stock if the major industries would scale up their production again three months later – because without steel, we have no production and no sales. We’re currently planning up to 18 months ahead. Partly because of that, we’ve not had any problems with the availability of steel in the last two years – despite a growth rate of up to 40% at times.”

Top priority

Before the other supply chain directors started sharing their own priorities, Schneemann showed them his Eisenhower Matrix. The alignment of supply and demand was positioned in the top-left quadrant as an important and urgent issue. “That was our top priority. In addition, we saw that our current software platform was inadequate, so we selected new software, which we are now implementing. We also redesigned the S&OP process. We’ve realized that sales & operations planning isn’t just a supply chain process, but a multidisciplinary process.”

Because of the considerable pressure on operations, Mustad decided to put topics such as diversity and sustainability on ice during the pandemic and to revisit them later. Schneemann: “Because we organized procurement very well from the start, we were able to delegate that to the various operating companies right away. We did the same with all the COVID-19 measures. In addition, we put a sizable number of projects on hold. It’s better to solve three problems well than to half-solve ten problems. We’re now expanding our organization again – not only to accommodate our growth, but also to restart some of those projects.”