Building a Resilient Supply Chain for the Next Normal

Nowadays, it is a common practice for companies to source goods from suppliers located all around the world. This helps them get the best price and minimize the time of manufacturing or assembling of finished goods.? During normal times the resilience of supply chains is not tested. So, the companies as well as the leadership are not aware of existing gaps and shortcomings in their supply chains. Only during a crisis, the faults in the supply chain are exposed.

?When the suppliers fail to meet their respective delivery schedules the production process is adversely affected for lack of essential parts. Customers and clients do not receive their respective purchases in time. This leads to cancellation of orders as well as loss of reputation. Consequently, the revenue and profits drop. Sometimes companies even have to shut down.

Switching Suppliers

The solution to such scenarios is to find an alternative or replacement. But this requires time and careful evaluation of prospective suppliers. Some suppliers may have their hand’s full in servicing other clients. You may not be sure of the quality and reliability of the supplier. Their prices may be on the higher side bringing down your profit margins.?

How Covid-19 Exposed Fault Lines in Supply Chains on a Global Scale

As you may already know, the Covid-19 pandemic lead to widespread and significant supply chain disruptions across the world. The pandemic is classified as a HILP (High Impact Low Probability) event. Before the pandemic, certain companies were working on the just in time manufacturing process. As a result, their inventory was low. They performed better and were faster when benchmarked against their competitors.?

But the pandemic affected their production process in a major way as they lacked buffer stock. Labor shortages during the pandemic led to delays in supplies reaching the manufacturing plants. Without the necessary raw materials and essential parts, manufacturing as well as assembly processes came to a halt. Companies with a resilient supply chain fared far better when benchmarked against organizations lacking a resilient supply chain.

The Concept of a Resilient Supply Chain

To put it simply, resilience means the ability to withstand tough conditions and recover to normal capacity. In the context of supply chain, it means the ability to recover from supply disruptions and function at levels during normal conditions. We look at ways for organizations to make their existing supply chain resilient so that they have the ability to withstand tough environments, recover fast and ultimately thrive. Making supply chains resilient gives companies an edge over entities who procrastinate or fail to make their supply chains resilient.

Current Disruptions

Today the US-China trade war and the Russian invasion of Ukraine is testing the supply chains. We can’t predict what will happen in the future. It is prudent to make existing supply chains future proof as far as possible.?

Below are a few recommendations to bolster existing supply chains.

Learn from Past Mistakes?

You may have had supply chain disruptions in the past. Analyze what problems were there and brainstorm with your team for solutions. Also, observe what your competitors did in similar circumstances. Copy their tactics and processes. Make improvements on them if possible. This way your company will be well prepared when the next crisis strikes.?

Diversify Suppliers

Do not depend on a handful of suppliers. Overdependence can cost you in both the short-term and long-term. Seek dependable suppliers in multiple locations. It is a good practice to increase the number of suppliers. Have good relations with all your suppliers to ensure smooth supplies irrespective of market conditions. As a precaution, carry out a risk assessment of each of your suppliers periodically.?

Leverage Modern Technology

Instead of manual human driven processes, use AI (Artificial Intelligence) tools. The latter will be able to predict future trends better and faster than their human counterparts. So, you can proactively implement the necessary measures for your supply chain to absorb future shocks. Use 3D printers to produce the needed items. Robots can be utilized for loading and unloading operations. ERP (Enterprise Resource Planning) software and Big Data are some technologies you could explore to modernize your existing processes.

Carry out Risk Assessment

Determine the existing and future risks in your supply chain nodes and processes. You may have to hire experts to execute this important and critical strategy. The money invested to do this step will yield manifold returns.

Source Locally

Sometimes the transportation and shipping get disrupted during crises. Procure the necessary goods from suppliers close to your manufacturing and/or assembly plants. You will save money in transportation and/or shipping costs. Also, you will save time and improve your ability to meet deadlines. The result is happy and loyal customers as well as clientele.

Invest in State-of-the-art Supply Chain Solutions

Note that supply chain solutions combine the domain knowledge of experienced supply chain individuals with the power and innovation of software technology. The supply chain software will learn from past data, anticipate disruptions, and automate the whole supply chain process. The former will effectively protect you from future crises and mitigate associated disruptions.? More importantly it will give leaders superior visibility into the entire supply chain lifecycle.

An Eye on the Future

We live in a very unpredictable world. No one knows when there will be a future supply disruption. So future proof your operations by taking the necessary steps to build a highly resilient supply chain.