Building Robust Supply Chains : Key Steps For Resilience

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Although efforts to strengthen supply chains have existed for as long as supply chains themselves, the global networks of today need a more proactive, ongoing, and meticulous approach. Now is the moment to review your readiness, even if you already have a strategy in place for resilience.

Building a more robust supply chain is one of the most important initiatives in the pursuit of international trade. However, too many businesses still suffer from hazards that could have been avoided.

The majority of supply executives’ problems are actually not brand-new. Natural catastrophes, pandemics, piracy, geopolitical conflicts, and meteorological occurrences are all long-standing threats. The frequency of their occurrence is novel.

The worldwide epidemic that caused ocean shipping costs to skyrocket by 1,000%, the ongoing and serious danger of cybercrime, and the simultaneous global wars were all things that most supply chain specialists could not have predicted. This is the high-risk climate in which international trade is being carried out. This is also the reason why it is more crucial than ever for executives to review their supply chain resiliency strategy and reevaluate how to strengthen their supply networks.

At its most basic level, supply chain resiliency is simply having a workable risk management strategy in place, which is a road map that outlines how to react in the case of an incident that affects your company. However, having a strategy is not enough; you also need to be able to carry it out fast in order to have a robust supply chain.

So how can supply chain executives make sure they’re ready? Assuming the correct mentality is the first step.

Having a risk management attitude is essential.

The most robust supply chains—those that continue to function well in the face of catastrophic occurrences—are the outcome of a risk management philosophy that prioritizes diversification. They are the result of organizations that laid the foundation for developing strategies that may be swiftly carried out. They primarily focus on two imperatives:

  1. The requirement for substitute suppliers: The cornerstone of every supply chain resilience strategy is the presence of substitute sourcing choices. It may also be one of the hardest things to accomplish, especially for businesses that depend on highly specialized raw resources or those that originate from conflict- or disruption-prone regions of the world.

Setting up optional suppliers is difficult, and screening them takes time. In highly regulated sectors like medical devices, where it takes 10–18 months to screen a supplier and handle compliance and quality standards, this is especially true. To guarantee continuity in the event of an emergency, these backup plans should be mapped out well in advance, not after the issue happens.

  1. The necessity of cross-functional cooperation: Companies with successful supply chain resilience strategies understand that their choices necessitate the opinions, support, and cooperation of colleagues in a wide range of internal company operations, including marketing, finance, procurement, and product design. For instance, it is worthwhile to investigate the possibility of substituting a more widely accessible item for a rare resin for extrusion molding that is only available from one source. The design and quality teams should discuss such issues.

Cross-functional cooperation is especially crucial when onboarding new suppliers is required, such as when the risks of a component shortage are significant for the operation and performance of the business. Procurement and finance must work together to evaluate suppliers’ quality, business methods, and financial stability as part of the onboarding process.

In order to respond to inquiries such if the dangers associated outweigh the need to store more goods and the financial outlays necessary to acquire them, as well as whether carrier partners can successfully integrate them into the company’s supply chain network, other departments might also need to be involved.

The second most crucial phase in developing any supply chain resiliency plan starts after onboarding. It is necessary to be vigilant.

Resilience necessitates ongoing observation

Crucially, supply chain monitoring is not the same as supply chain visibility. Understanding the origins of goods, including where your suppliers obtain their materials, the frequency and method of delivery, and the occurrence of any disruptions is the essence of supply chain visibility. However, supply chain visibility by itself is insufficient protection.

It is essential to closely monitor the supply chain as well as the numerous problems and occurrences that may affect it. Monitoring initiatives must to be comprehensive and focus on a number of important aspects:

  1. Monitor the appropriate performance indicators (KPIs): Leaders should inquire as to whether they are monitoring the appropriate items in order to ascertain whether their supply chain is operating at peak efficiency and risk-free, which varies depending on the product. It is necessary to monitor internal measures such as throughput levels, maintenance costs, overall equipment effectiveness (OEE), and performance standards, including whether continuous improvement is attained.
  2. Perform regular evaluations and use supplier scorecards to keep an eye on suppliers: Analyzing metrics such as quality levels and the proportion of on-time and in full (OTIF) deliveries should be standard procedure. In order to stay in touch and learn more about the supplier’s financial situation and other aspects, leaders should also perform quarterly or yearly business evaluations. Relationships with suppliers should be strengthened as a result of these reviews. When challenging circumstances necessitate supplier diversity, providers instinctively prioritize serving their familiar clientele.
  3. Keep an eye on world events: Nobody foresaw the effects of the Uyghur Forced Labor Prevention Act, the collapse of the Francis Scott Key Bridge this year, or the 2011 floods in Taiwan that decimated the hard drive industry. Quick-thinking supply chain executives always have a significant and immediate advantage. Continuous observation of global events and the threats they present is necessary for prompt action.

More than anything else, supply executives need to keep in mind that robust supply chains and business continuity demand constant effort. Like the situations that put it to the test, the definition of preparedness evolves daily. The moment has come to review the supply chain resiliency strategy that worked for you and take steps to make sure your company is ready for any disruption.

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