How To Build Resilience in Your Supply Chain
Disruptions in the supply chain are an unavoidable part of the global supply chain ecosystem. Natural disasters, the COVID-19 pandemic, and the resulting supply chain disruptions have led to global shortages and increased competitiveness amongst businesses. Companies were, and continue to be, desperate to mitigate the issues, get profitability back to where it was pre-pandemic, and move forward.
When supply chain operations are disrupted we often go into damage-control mode, leaving predictive planning and forecasting by the wayside. But as a supply chain leader, you have a responsibility to your customers and stakeholders to use good decision-making to discover potential disruption before it occurs. Building a resilient supply chain can help you put strong supply chain risk management strategies in place.
What Is Supply Chain Resilience?
Global disruptions to the supply chain have created a need for increased resilience in the way you manage your supply chain. A resilient supply chain is defined as one that is both resistant and able to recover and adapt from disruption. A resilient supply chain can mitigate the disruptions and limit the negative impacts of those disruptions. When your operations are threatened, you must have options and plans to avoid disaster.
The most resilient and agile supply chains do more than just push back against change. They also use modern technology and real-time data to improve their operations and find solutions that will bring about long-term change — not just short-term solutions. When your supply chain is strong and can anticipate and adapt to risks, you can build a better business no matter what challenges come up.
A Step-By-Step Guide for Building a More Resilient Supply Chain
Having a resilient supply chain is important in today’s world of countless disruptions and major changes. Let’s go through the steps you need to take to build a more resilient supply chain and prove to your shareholders that you can make the right decisions to keep the business moving forward.
1) Locate the Most Impactful Vulnerabilities in Your Supply Chain
Before you can begin improving your supply chain strategies, you first need to take a step back and examine any potential supply chain weaknesses that you might have. Every supply chain has vulnerabilities — especially if it hasn’t been examined closely in a long time. Far too many businesses don’t like to look at what makes them vulnerable. Unfortunately, this means that those areas never get fixed.
When you lay out your supply chain practices and closely examine them, you can identify your most impactful vulnerabilities and then create a plan to address those areas, so they don’t become the business’s downfall. While this may be a difficult step to take, it is essential to the long-term success of your company.
2) Communicate With Your Partners and Agree on Key Metrics
Communication is key. Whether you are communicating with suppliers or with your stakeholders and executives, you need to have clear lines of communication in order to identify what your goals are and which areas you want to focus on when first approaching supply chain resilience.
When you communicate regularly with your partners and approach the supply chain resilience project with a group effort, you can find more areas of improvement that you might have missed on your own. It also builds up the project’s importance and increases the odds of buy-in for major changes that you perceive necessary for the supply chain’s longevity. By working as a team with your partners, you can all agree on the key metrics you want to track and set the goals you will use during your entire examination of the supply chain process.
3) Create a “Safety Stock” To Avoid Hiccups in Flow
Safety stock refers to an extra quantity of products and goods stored to mitigate the risk of a stockout. When your supply chain experiences disruptions, you may find yourself struggling to meet demand and deliver products to the consumer. This can lead to serious consequences like damage to your reputation and unsatisfied customers.
Having a safety stock allows you to fill orders even when your supply chain is experiencing some hiccups. This allows you to manage the customer-facing areas of the business without giving away that you are struggling to get a particular component, or are experiencing difficulty with a supplier. It’s a great idea for managing your stock and inventory levels if you have the space to store extra items.
4) Diversify Your Physical Inventory Across a Few Locations (If Possible)
In addition to adding allowances for safety stock in your warehouses and factories, it’s also a good idea to diversify your inventory across multiple locations in the country — or even the globe. This can help you cut down on long lead times when there are shortages of materials or when you are struggling to find reliable product transportation.
In addition, you can use this product diversification to save money. When you ship over long distances, it can lead to bloated shipping costs and transportation budgets. By having physical inventory in more locations, you can avoid the surcharges for diesel and gas and instead get products to customers for less.
5) Expand Your Supply Chain Relationship Network
Another area of supply chain efficiency is expanding your relationship network. Having a wide network of suppliers to choose from can help you avoid major slowdowns or shutdowns in your supply chains. This is particularly useful if you get materials or products from overseas, as international politics and regulations constantly shift and change.
When you have multiple supply locations, you aren’t dependent on a single supplier for your product. This also gives you more options for finding the best pricing and shipping costs. It can increase the overall efficiency of your organization and keep your operations running smoothly — even in difficult situations.
6) Utilize the Best Technology to Scale Your Operations
Managing your supply chain manually is virtually impossible, especially in today’s global business world. Without the best technological solutions by your side, you won’t be able to scale your operations or stay afloat during times of uncertainty in your supply chain. However, with the help of supply chain management software, you can track your incoming materials, improve your relationships with suppliers, and streamline your processes all with a single tool.
Investing in powerful digital tools like Anvyl is one of the best ways to add more resilience to your supply chain strategies: You can forecast more accurately and predict upcoming stress without waiting for the negative impacts to affect your business.
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Benefits of Supply Chain Resilience
There are many reasons why you should focus on supply chain resilience. It’s an important factor of supply chain management that is all the more significant now that we’ve seen how impactful events like the COVID-19 pandemic can be on the global supply chain. Here are just a few of the benefits of building a more resilient supply chain:
It Minimizes Risks
While some level of risk is expected in manufacturing, there is a fine line between “some” and “too much.” When you continually face risk, it can make your shareholders question your ability to adapt and move forward, and can damage your reputation among customers.
Having a resilient supply chain reduces risk and makes you less vulnerable when global changes occur. This allows you to empower your business and optimize your processes so that you can process your logistics faster and be more agile when there are upcoming challenges in your supply chain.
It Increases Supply Chain Productivity
Improving your supply chain productivity is an important part of making sure you are ready to manage global supply chain challenges. When you see an overall increase in productivity, you can better approach all of your systems — in good times and bad times. Not only is this great for your company’s bottom line, but it can also help you get more buy-in from shareholders and executives when you want to focus on supply chain resilience strategies.
A productive supply chain also helps you improve the relationships you have with suppliers, and even the relationships you have with your employees. Your teams will appreciate it and feel more at ease when you show them that you can keep them busy (and employed) even during major supply chain disruptions.
It Enables More Flexibility and Proactivity in Your Supply Chain
Changes are unavoidable, no matter how complex or simplified your supply chain is. By building supply chain resilience into your strategy, you can enable more flexibility and proactivity in your supply chain network. Whether you are dealing with a global pandemic, a new trade sanction, or any other unpredictable disruptions, you need to be able to adapt to change at a moment’s notice. This creates a more flexible brand identity and a proactive approach to supply chain management rather than a reactive approach.
It Enhances Your Competitive Edge
Being competitive is an important part of running a successful business. You need to have the edge over your competition in order to scale your brand, experience regular growth, and delight your customer base. Being resilient means that you can move forward, fill orders, and continue your manufacturing operations even when your competitors slow down or shut down due to disruptions — giving you a competitive edge. This proves to stakeholders and customers that you are a reliable business they can trust to deliver even during tough times.
It Necessitates Accessible, Real-Time Inventory Data
You can’t be resilient with outdated technology. When you invest in resilient strategies, you force the need for accessible, real-time inventory data. This means that you can invest in the technology solutions that allow you to gather this important data with less push-back from higher ups.
Having the right technology is crucial, and without real-time information, you can’t make the most well-informed decisions possible. This can lead to errors or mistakes in your supply chain management strategies, so it’s essential that you have the right tools and platforms on your side.
Supply Chain Resilience Examples
Supply chain resilience is happening all around us. Here are a few examples of industries that have pushed through challenges and are coming back around with the help of a resilient supply chain.
- The Automotive Industry: When semiconductors became scarce, thousands of cars were stuck sitting on lots, unfinished without the critical part. However, the automotive industry has proactively managed suppliers so that they have more options for parts and have put plans in place for future disruptions.
- The Medical Industry: The supply chain refers to more than just raw material sourcing; it also deals with changing laws and regulations. When changes in the medical and healthcare fields occur, the medical industry has updated its technology to help identify risk factors and prepare for potential risks.
- The Technology Industry: When the pandemic began, there was an increased reliance on technology. The demand was more than some companies had room to manage, leading to a problem where the demand was higher than the supply. By planning for rapid growth and diversifying their partnerships, the technology industry was able to adapt to the changes.
Enhance Your Supply Chain’s Resilience With Anvyl
Supply chain risk is part of running a business. However, the damage to global supply chains and supply chain disruptions have made regular practices more difficult, like sourcing, working with providers, and maintaining sustainability. When your supply chain network is threatened, you must figure out how to regain a competitive advantage.
Having the right digital tools can go a long way in helping you improve your supply chain strategies. Integrating your practices into building connectivity between your processes and automation can help you strengthen your supply chain and build resilience into your daily procedures. Anvyl is a platform that helps manufacturers streamline their supply chains with intelligent technology. To learn more, get a demo of the platform and see what Anvyl can do for you today.
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