1. Introduction
Just a few years ago it may have seemed unbelievable, but with our rapidly changing world the unbelievable has become reality – we are now in a state of VUCA. VUCA stands for volatile, uncertain, complex, and ambiguous. Most people will probably agree that VUCA is not desirable, and it is also not something many companies had planned for – especially related to the design and operation of their supply chains. Companies that rely on complex supply chains to control the flow of products from manufacturing through distribution to customers are witnessing VUCA wreak havoc on the operational efficiency and effectiveness of their supply chains. VUCA is a concept highlighted by Carol Ptak and Chad Smith in their book “Adaptive Sales and Operations Planning” where they described the world we live in today as follows:
Volatile: We see that both the frequency and the magnitude of disruptions to supply chains are increasing. Recent examples include the COVID-19 pandemic, war in Ukraine, severe weather phenomena, etc.
Uncertain: It is becoming increasingly difficult to predict what will happen. The more detailed and remote in time our predictions and plans are, the more we can expect variances to be experienced. This is true despite massive amounts of investments and advancements in forecasting technology.
Complex: Supply chains are not and never have been linear systems. Most supply chains have more relationships, interdependencies, and nodes than ever before in history, leading to more complications. The net effect of these complications is that delays in supply chain flow accumulate and propagate while gains do not. There is now more than ever a growing disconnect between customer expectations and the reality of fulfilling those expectations reliably and consistently.
Ambiguous: This is distinct and different from trying to predict what will happen. In this context, ambiguous is referring to the fact that it is often very difficult to tell what is happening at any point in time. Organizations are literally drowning in oceans of data but at the same time are starved for truly relevant information. Worse yet, what organizational personnel may believe is relevant information often leads them to make decisions and take actions that harm long-term sustainability and resilience in the VUCA world.
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