Supply chain resilience

What is supply chain resilience? 

How can you make your business supply chain resilient?

Having a diverse supply chain can help to improve your resilience. If you do not depend on one single supplier, in one single region, but suppliers spanning different geographical regions, your supply chain can respond quickly. For example, when COVID-19 first appeared in China, the world’s factory effectively went under, as many organisations and industries rely on China for goods.

Diversification up and down stream is a hugely valuable tool in building resilience in supply chains. Whilst mapping your chains, consider these factors:

• Diversity of suppliers and supply locations
• Diversity of transport and logistics
• Diversity of received product (finished and intermediate goods)
• Diversity of customers

Stay ahead and monitor market trends to ensure your have enough to meet consumer demands. Having an effective demand planning strategy and technology in place will help you to respond to a sudden influx in demand.

Further to this, understanding your data can help you improve your inventory control. By using this data, you’ll be able to know how much safety stock you can afford to store.

How do you support resilience and capacity within the supply chain? 

Supply chain resilience comes down to the collaboration across the whole supply chain and having a visibility of who is involved, at all levels.

It’s important to understand exactly where things are made, and build strong relationships with suppliers, as often intermediaries are geographically spread but the actual manufacturers are not. Comparative advantage (where a country can produce goods more cheaply and at a larger volume) should be considered when thinking about diversifying. Concentration of suppliers carries a risk in having all your suppliers in one location, even if it is a specialised location.

A strategy that looks to identify opportunities to diversify supply chains, balancing the risks and identifying alternative options will be optimum to establish greater resilience against shocks or market disruption and can consider:

• Diversification encourages the identification of alternate sources of supply to create flexibility in the supply chain through dual/multi-sourcing.
• Opportunities for partnerships and collaborate with complementary organisations or industry, identifying common challenges and working together to solve issues.
• Creating stockpiles and surge capacity of components/goods which are vulnerable or at risk.
• Onshoring, where you might identify opportunities to expand domestic capacity.
• Demand management, can you identify if there is anything you could do to manage your demand for the product, for example, considering if there are substitutes or alternatives.

Listen on demand and get the latest practical insights from our panel of procurement and supply experts.