From VUCA to FICA world of Supply Chain

For a decade or more the world of Business and Supply Chain has been acclimatizing itself with the VUCA world. VUCA being an acronym for Volatile, Uncertain, Complex & Ambiguous. Supply Chain strategies & operations have always been anchored around VUCA.

As has been abundantly proven since the onset of 2016 Trade war between US & China followed by the Pandemic and more recently the military operation of Russia in Ukraine, the world is not a VUCA world anymore. Rather is has passed that stage of VUCA to represent a new world reality of future.

I think FICA  is the way to perceive & act on the future order of Supply Chain.

FICA for me is Fragile, Intricate, Chaotic & Anxious

F - Fragile - It is more than abundantly proven in the recent past that Supply Chains have been found to be Fragile. I shall explain this in a minute with an example. In late 70s and early 80s the world found (due to organizations like WTO) that there can be an opportunity for a global Supply Chain. This was predominantly because the organizations like WTO created the needed framework for consistent global trade practices. So what did the Supply Chains of the world do? They all anchored themselves with a uni-variate decision making framework to land-up in "China". How good that was? It was as good as it was that most of the Supply Chains originated in China & Supply Chains were very happy with the cost arbitrage so much so that it took the onset of Pandemic in 2020 & now in May 2022 (with China imposing one of the strictest lock-downs) to realize how 'Fragile' their Supply Chains were. If the Supply Chains had some more intelligent way to decision making over last three decades they wouldn't have all centered in China to create a "Fragile" Supply Chain. The future order of Supply Chain is suddenly dawned on us to make it less Fragile with China+1, de-risking the Supply, no single sourcing or less single sourcing etc etc. To make the Supply Chain less fragile is the need but for Indian Supply Chain i think the opportunity is to become "Anti fragile"

I - Intricate - Supply Chains are becoming less and less "comprehensible". The demand shifts, the imbalances in international logistics, incomprehensible nature of the world economy post Covid with a deep Geo-political rift are only leading the Supply Chains to become more 'Intricate'. The nature of the future Supply Chains is hence likely to move towards being one where a "rules & procedure" anchored Supply Chain will find itself be in-competitive against an "open & entrepreneurial spirit" based Supply Chain.

C - Chaotic - There always has been a talk about number of variables that impact the Supply Chain and the rate of change in the those variables. The pre-2000 Supply Chain was considered to be low to moderate on both hence was a "Static" Supply Chain. Supply Chain practices aligned to it being a Static Supply Chain (e.g. MRP, Lean etc) were linearly replaced in the post 2000 Supply Chain when the number of variables increased but their rate of change was still low to moderate. Hence we currently have Supply Chain practices which broadly have to align the "Dynamic" environment. Supply Chain practices like Demand Driven planning systems, MRPII, replenishment based models etc. The 2022 and onward looks like a environment of Supply Chain being impacted with large number of variables whose rate of change is also very high, signifying a 'Chaotic' environment. I shall explain that with an example. During the time period when Covid wave 2 hit, I was on a discussion panel of one Supply Chain conference. For one the Pharma companies the demand for their product, in a short period of time, had gone out of the roof. Demand outstripped Supply by multiple times. Four weeks later, the demand for the same product touched the floor without Covid going away. So the basic trigger for the demand still existed but the product demand had vanished. How Chaotic would the Supply Chain environment be? Its a "Non-Linear" Supply Chain world.

A - Anxious - One needs to be future ready to handle 'Anxious' stakeholders. Fragile, Intricate & Chaotic nature of the Supply Chain will add further fuel to stakeholders becoming more 'Anxious' about likely outcomes. Visibility of the Supply Chain may tone down the anxiety but will not take it away at all. Managing expectations shall lead to dampening of the Anxiety of Supply Chain. Under commit - Over delivery may be the mantra for dampening the anxiety.

We need to tighten the seat belts while we work ourselves through the rest of the decade as FICA replaces VUCA in the future of Supply Chain.


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