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The seven key elements of a resilient supply chain

Top strategies for protecting your supply chain and minimizing disruption in an era of unprecedented challenges

September 30 2021Sandip Dalvi

What is disrupting supply chain operations?

From a 200,000-ton cargo ship grounded in the Suez Canal, ports paralyzed by a cyber attack, to the cold chain’s capacity to deliver vaccines in low-income countries, supply chains can tumble like a pack of cards. 
A landmark survey explored the biggest disruptions to supply chains. What caused them, and what can organizations do to build their resilience and guard against future shocks?  
 

Insights from the supply chain resilience study

From a bird's eye view, an airplane and a ship cross the ocean.

From a survey of 400 senior supply chain executives, top-level findings included:  

  • The Covid-19 pandemic was cited as the single largest cause of disruption, ahead of global cyberattacks.
  • The consequences of supply chain disruptions include rising operational costs and reputational damage. 
  • US execs in particular reported frustrations, having been beset by difficulties striking long-term supply deals with Chinese companies amid a US-China trade dispute. 
  • Signaling a major strategic shift, 60% agreed that redundancy trumps speed and efficiency in their supply chain priorities.  
  • To allow for the rapid delivery of goods, some firms have regionalized or localized their supply chains. 
  • A third of companies are simplifying their supply chains. 

Actions to mitigate future disruptions include strengthening supplier relationships, installing risk management teams, implementing new processes, and technology investment. 

Building resilience in the supply chain

Undeniably, the intensity and frequency of supply chain disruptions are of growing concern, but they also present an opportunity to rebuild stronger and more sustainable than before. Against a backdrop of trade disruptions, geopolitical tensions, climate change, and environmental catastrophes, the case for change in the supply chain sector is compelling.

Supply chain professionals can create use cases that call for new investment and demonstrate ROI. They can reimagine how things are done. For those willing to go fearlessly forward, there is potential to create lasting, global change – an exciting opportunity!

Resilience across the entire chain is vital; you are only as strong as your weakest link. So, what actions should you take?  

Factors disrupting supply chains over the past three years (% of respondents)

IM-Grafik

Image source: EIU

1. Leverage data

Supply chain executives can apply data analytics to make better use of information. Pulling data from internal and external sources makes it possible to predict likely scenarios and get in front of them before they cause problems. Leveraging data starts with digitalizing every conceivable element of the supply chain. This white paper takes a deeper dive.

2. Foster a robust supplier network 

The global, interdependent nature of supply chains makes relationships and collaboration with partners and third parties more critical than ever:   

  • Identify ways to improve supply chain transparency.  
  • Take a diversified approach to sourcing and consider alternative manufacturing bases.
  • Consider multi-sourcing. Reliance on a single source of supply increases risk. 
  • Nearshoring - reduce geographic dependence on global networks, shorten cycle times for finished products by moving the product closer to the end customer, and gain more control over inventory.  
  • Assess suppliers regularly and consistently to obtain meaningful data. It’s good practice to assess riskier suppliers more frequently. When there is a need to increase volume with a particular supplier, or if they experience change or difficulties, reassess the risks.  

3. Improve cyber security 

With cyber-attacks on supply chains set to quadruple, some business leaders view cyber security purely as a necessary but distracting burden. By thinking more strategically about risk protection measures, you can find ways to create value. For example, cyber security can automate and support your compliance obligations and assist the vendor selection process. Keeping security as a top priority in all technological and supplier-related decisions creates the necessary resilient foundation for survival and growth.  

4. Create inventory and capacity buffers 

Gartner believes that buffer capacity is the most straightforward way to build resilience, whether through excess stock requirements or underutilized production facilities. While finance heads may balk at the prospect, it’s possible to counter their argument if the historical evidence shows the losses incurred through not having buffers.  

5. Be prepared to transform business models

Two women walk through a warehouse.

Flexibility is a core factor of successful business models. We can go beyond the obvious and look to other industries for inspiration – from distilleries making hand sanitizer to the automotive industry switching from vehicles to ventilators
How this translates in your supply chain is limited only by your imagination. 
Customer requirements are changing on an ongoing basis, and whole-supply-chain digitalization can power the services they now demand. Fundamentally, the new normal needs a new business model.

6. Harmonize operations 

Harmonization can take many forms and apply to many areas: across IT platforms, manufacturing plants, storage warehouses, and distribution centers. Harmonization brings greater visibility and operational efficiency, enabling greater resilience. 
Product harmonization is another opportunity to increase reliance. For example, the use of standard vehicle parts in the automotive industry simplifies sourcing. 
Rapid advancements in supply chain technologies for different industries can make your harmonization ambitions a reality, creating more opportunities to design resilience into your operations and processes. 

7. Disaster Recovery planning

The reality is that even the most resilient supply chain will falter or seize at some point and for any number of reasons. It’s critical to create a posture that enables flexibility and monitors and mitigates risk. 
The mantra for your disaster recovery and business continuity planning is test, test, and test again. When an unforeseen event occurs, it’s vital that your plans are well-rehearsed, fine-tuned for all possible eventualities, and understood by all.

Provider comparison report by ISG

A comparison of provider strengths, challenges, and competitive differentiators.  

Wrapping up and useful resources

We hope these strategies help you build a more resilient supply chain. We’d be glad to help you find ways to optimize your supply chain management. You might also find these resources helpful:  

About the author
Portrait von Sandip Dalvi

Sandip Dalvi

Industry Marketing Expert for Travel, Transportation & Logistics vertical, T-Systems International GmbH

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