Mastering the Art of Supply Chain Resilience

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Mastering the Art of Supply Chain Resilience

07/25/2024

In recent years there has been a trend in businesses adopting a ‘lean’ approach to supply chain management, whereby goods were only received as they were needed in the production process. While the ‘just in time’ approach to supply chain management helps ensure optimal efficiency, in uncertain times, such as Covid-19 where the world is significantly altered, this strategy can leave businesses vulnerable to supply chain disruption.

In some cases, the impact of global events means there has been a shift from ‘just in time’ management to ‘just in case’ supply chain management, which involves companies holding larger inventories as a precautionary measure to safeguard against potential disruptions. While this can help to create a greater assurance of product availability, ‘just in case’ supply chain management brings its own additional challenges, including higher holding costs and a reduced capacity to adjust to fluctuations in demand.

So how to strike the balance between the agility afforded by ‘just in time’ supply chain management, and the resilience that the ‘just in case’ approach offers?

 

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Not only are agile supply chains designed to enable businesses to respond to changes in demand and market trends, but also to allow them to adopt a flexible approach when external factors cause disruption. In the face of geopolitical disruption which may impact long-distance supply chains or key suppliers, having an agile supply chain provides businesses with a greater ability to pivot their approach accordingly. Furthermore, this approach helps to build supply chain resilience by reducing excess inventory and encouraging investments in new technology and better processes.

Confronting Challenges to Supply Chain Resilience

Aside from natural disasters and geo-political concerns, there are some additional challenges faced by businesses worldwide when it comes to building resilient supply chains, including:

Globalization:

As supply chains become more global, they naturally become more complex as businesses need to coordinate activities across different regions and deal with various regulations, all of which can be disrupted or impacted at different times.

Supplier vulnerability:

Businesses that are reliant on a limited number of suppliers could find themselves with a more vulnerable supply chain, as the acquisition of critical components could be compromised.

Equally, sourcing crucial components from multiple suppliers means managing multiple sources, which can be accompanied by its own complexities.

Supply chain visibility:

Another challenge to building resilient supply chains is visibility, as a lack of real-time data, transparency, and traceability can hinder your ability to respond proactively to issues.

Rapid technology changes:

Although technology integration is vital for businesses to build resilient supply chains, rapid changes in technology can mean that keeping processes and systems up to date can be difficult.

Cost considerations:

Building supply chain resilience often involves additional costs for redundancy, safety stock, and advanced technologies. Although supply chain resilience can be financially rewarding, these upfront costs are a consideration for businesses in the short term.

Having an early understanding of possible difficulties enables companies to plan and respond quickly to disruptions to minimize the impact.

Build redundancy:

Having alternative suppliers, backup inventory, and redundant logistics capacity can help ensure continuity of operations in the event of disruptions.

 

Continuous monitoring and evaluation:

It’s vital that businesses continually monitor the performance of their supply chains to identify areas of improvement. In turn, this can help improve resilience and agility over time and ensure long term business success.

Revolutionizing Your Supply Chain with Digitalization

Another element that’s crucial for building supply chain resilience is incorporating digitalization and technology. Investing in digital technologies such as IoT, blockchain, and AI can help businesses gain real-time visibility into their supply chain and optimize accordingly.

The ability to track your container’s location using loT, combined with an understanding of possible risks or demand changes thanks to AI integration means businesses have the foresight to adjust their supply chains early. This not only minimizes bottlenecks but can help companies stay ahead of competitors who lack the same agility within their supply chain.

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If you’re looking to enhance your current supply chain, or develop greater agility or resilience, speak to one of our experts today.

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