Supply Chain Resilience: 5 critical elements to create a robust structure.

Supply Chain Resilience is the adaptive capability of the supply chain to respond to unexpected events, respond to disruptions and recover from them. The lessons of the Covid19 pandemic have emphasised the importance of the resilient supply chain to all organisations. Creating a resilient supply chain cannot be done overnight. It requires a building project to build the “Temple of Supply Chain Resilience”. It involves all areas of the business and will impact on everything from product and service design to business culture. So build a “water tight” and “weather resistant” structure in place to enable your business and supply chain to weather the storms of disruption.

1) Get the foundation right – be clear on your supply chain strategy.

The foundation needs to an effective supply chain strategy as this will impact on the risk profile of the supply chain. Supply Chain Strategy requires clear linkage to the Competitive strategy of the business, i.e. understanding what the customer values. The supply chain strategy is focused on supporting the delivery of that value to customers. This will define the Supply Chain Processes, Infrastructure & equipment, information systems and supply chain organization (how people within the supply chain relate and the skills they require.)

2) Ensure the flooring is sound – Design products and services that are supply chain friendly.

The floor of the Temple needs to be “Product & Service design for supply chain management”. Supply Chain Risk is often embedded during the design stage of a product or service. Consider the raw materials used and where these will be sourced from, can a design utilize different materials to achieve the same outcome? Can the product be designed so it can be configured as close as possible to the customer thus enabling different products to be configured according to the customer’s needs without increasing complexity?

3) Get the main pillars of support in place – Agility, Collaboration, Culture, Supply Chain design.

Now build four pillars. Firstly, agility to ensure flexibility within the supply chain operations, secondly build collaboration internally and externally, the more you collaborate the greater the resilience you can achieve. Thirdly, get a supply chain risk management culture embedded so when people make any decision, they ask one simple question “How will this impact on the overall risk profile of my supply chain?” Don’t allow people to make decisions without reflecting on the impact they will have on others within the chain. For example, purchasing from one nation may be less expensive but what about lead-time, risk of disruption and potential inventory increases? Fourthly, supply chain design – consider the locations and network you use, and the equipment you use. For example, on-shoring, near-shoring and multi-shoring all change the risk profile, a forklift truck on lease may seem a good idea but where are the spares sourced from? Make sure you ask questions and understand the impact of decisions!

4) Create the protective ceiling – Supply Chain Transparency.

Now you need to top off the temple with the ornate ceiling of supply chain transparency. Ensure you have high levels of transparency across your product flows and network. Transparency is required to reassure all that the supply chain is operating effectively this requires connected information systems, control towers and good communication, but also simple even one paged supply chain maps can be utilized so all have a clear understanding of the supply chain nodes and flows.

5) Ensure the weather resistant roof is in place – Continuous monitoring and intelligence.

Finally the crown of the roof on the temple is continuous monitoring and intelligence. This ensures a weatherproof structure.  New tools based on artificial intelligence can support the monitoring and intelligence process. Logistics Providers are also rapidly developing tools to support supply chain professionals in this area (e.g. Maersk NeoNav, DHL Resilience 360 (with Everstream Analytics) to name a few) Make sure your employees, suppliers and customers have ways of keeping you informed of issues so you can act quickly (hopefully quicker than your competitors) so you can always keep ahead, securing the resources you need to keep your supply chain operational. Ensure you are aware of Environmental, Societal and Governance risk (ESG) across your entire supply chain.

If constructed well and maintained regularly your temple will provide many years of resilience in an increasingly volatile world.

(Additional blogs and information can be found at www.richardwilding.info and https://www.cranfield.ac.uk/som/clpscm )