Every time there’s a major global event, a natural disaster or dramatic economic downturn, the world’s biggest businesses suffer because of a lack of flexibility and resilience in their supply chains. As we all know, an entire supply chain becomes vulnerable if one component is exposed to risk, just like a house of cards will topple if one section is out of balance.
Supply chain resilience can be defined as “the ability of an organization to use its resources to handle unanticipated supply network disruptions.” This definition highlights two important features: first, that resilience is an organizational capability rather than a specific technology or process; and second, that it involves not only handling unexpected events, but also doing so in a way that preserves the core business needs of the organization.
According to the 2019 Business Continuity and Disaster Recovery Survey Report, over 70% of organizations don’t have a business operations contingency plan to deal with disruptions lasting more than a few weeks.
4 Core Elements of a Resilient Supply Chain
End to End Monitoring
It’s no secret that supply chain management is a challenge for many companies today. In fact, according to a recent study by Deloitte, only 30% of companies consider themselves “satisfied” with their current supply chain strategies.
Part of the reason for this dissatisfaction is the fact that most organizations simply don’t have enough information about what’s happening at different levels of their supply chain. This means that they can’t identify opportunities to improve or even determine whether their suppliers are meeting their needs.
A resilient supply chain requires continual monitoring, but many companies lack awareness of what’s going on with their vendors and consumers at different levels. Vendors who are critical to a company’s success should always be closely monitored, as they could cause problems if they are underperforming or not meeting expectations in some way—and this may not be immediately apparent without more data analysis.
Sourcing Diversification
When it comes to mitigating the risk of a supply chain failure, companies have a lot of options. One of the most effective methods for reducing that risk is to eliminate single points of failure.
Single points of failure occur when one part of your supply chain is so critical that if it fails, everything else goes down with it. This can happen anywhere in your supply chain—if you rely solely on one vendor or region, for example, and that vendor or region goes out of business, then you’re stuck without any way to continue operations until you find an alternative supplier.
Incident Tolerance
It is important for companies to understand what their current risk profile looks like, as well as where they can improve it. For example, some companies may have excellent security measures in place but need to improve their backup policies and disaster recovery plans. Other companies may have poor security measures in place and need better training for employees on how to prevent breaches from occurring in the first place.
The goal is to build incident tolerance or the ability to ensure that the supply chain keeps running, regardless of the nature or scope of an incident.
Agility
Agility is key to being able to stay competitive, and it’s what sets apart the best of the best.
The most successful organizations are always looking for new ways to gain insights, foresee opportunities and risks, and take aggressive action ahead of their competitors. They use the latest technology developments and tools in their industry to do this, and they operate with an agile mindset.
The Key Enablers of Supply Chain Resilience
People
A crisis management team is necessary to ensure that your organization is prepared to handle supply chain disruptions.
The team should be comprised of those who are very knowledgeable about the inner workings of your organization, have access to organizational insights, and are resilient people.
The crisis management team should draft a response playbook, acquire appropriate technologies, and develop and run mock drills to prepare the entire organization for disruptions.
Processes
The ability to perform at your best is dependent on having access to the information you need when you need it.
This is especially true in crisis situations where employees need to make decisions quickly and have access to the most accurate information possible. If your processes are inefficient and outdated, it can be difficult for employees to get that data at a moment’s notice.
If you want your employees to make the right decisions during a crisis, then you need to digitize as many processes as possible. This means moving away from paper-based systems and toward digital ones that allow for instant access to large amounts of data.
Technology
Although many organizations use technology, they may not be using it in the most effective way possible. By implementing a centralized incident management system, you’ll be able to ensure that all your employees are working together to fix problems quickly and efficiently.
This database should include detailed descriptions of each problem as well as any previous solutions that were attempted but did not work out as expected (or at all). Once that’s done, you’ll need to train all employees on how this database works so they know how best to use it when something goes wrong.
Making your supply chain resilient is a vital undertaking, but it takes time, effort, and expertise to get the job done. Is the technology side of supply chain resilience on your to-do list this year? We’re always here to help.
