Build Resilience into Your Supply Chain
It’s not if you’ll run into trouble, but when. That’s what some motorcyclists say. They’re preparing themselves, just in case—something that supply chain managers should also do. For instance, say a natural disaster occurs. When will you develop a mitigation strategy? After the disaster, when you’re dealing with system failures? Or before, when you can still have time to identify and evaluate the weakest links and develop a plan to circumvent potential disruptions?
This is no academic discussion. Natural disasters and events like port strikes have already revealed weaknesses in lean global, regional, and domestic supply chains. Disruptions can break the connections between a company and its customers and suppliers and last for days, weeks, even months. The longer those connections remain broken, the easier it is for competitors to step in and take market share.
Global companies with high-value, high-demand products coming from multiple locations are the most likely to need a mitigation strategy. Certain industries are particularly vulnerable to disruption. Retailers and brand name pharmaceutical companies require speed to market to keep sales channels open and customers satisfied. Manufacturers need raw materials and supplies at planned intervals to prevent downed plant lines and maintain machinery. Food and beverage companies must be able to trace problems back to their source in multi-tiered supply networks.
So what can be done?
Mapping the supply chains can identify where the chokepoints are, and whether they are related to suppliers, inventory, transportation, or technology. Questions like these may arise that can lead to a resiliency plan:
- Do you have backup suppliers for critical components?
- Where is inventory located? Is it at the right levels, and are most-used SKUs close to key customers?
- Should there be a plan for safety stock or forward stocking?
- What transportation alternatives are there that could keep product flowing?
- If operations technology is disrupted, corrupted, or destroyed, how quickly can data be recovered?
Certain considerations can help build backup plans for more resilient supply chains and help companies adapt to changing circumstances. Companies with resilient global supply chains are more likely to have goods available when they need them, and to be able to continue serving customers without disruption. And when they can see their inventory, they are less likely to spend unnecessarily to transport emergency supplies.
Complete redundancy is cost prohibitive. But some redundant stock, systems, and resources can help avoid the waste of system breakdown if a disaster occurs, even in a highly efficient supply chain. You can obtain tips for reducing risk in the white paper, Add Resilience to Supply Chains.