Resilient Supply Chain in the Face of Disruptions

 The modern global economy is more dynamic than it has ever been. Traditional business models struggle to keep up amidst rapid innovation in many industries.

Companies will struggle to operate on a linear “push” paradigm. It simply means acquiring raw materials, manufacturing products, and then releasing their products onto the market. 

Customer demand is constantly changing every day while companies continue as usual.

The demand at the time of procurement can be very different from the demand during manufacturing. It can change even more during the actual distribution. 

Resilient supply chains are the only long-term means of guaranteeing growth and success. 

The capacity of a business to successfully adjust and bounce back from disruptions within its supply chain network is known as supply chain resilience. 

Natural catastrophes, economic crises, geopolitical conflicts, and other unanticipated events can affect the movement of products, services, or information, disrupting the supply chain.

Agility is a vital component of a robust supply chain. It allows for prompt response to disturbances, which reduces their detrimental effects on operations. However, the most resilient businesses can foresee potential threats and take proactive measures to mitigate them.

Businesses that know that conventional, linear, and compartmentalized supply chain management methods are ill-suited for a constantly changing world.  Adapting new techniques and strategies will be well-positioned to succeed. 

Acknowledging the necessity is only one aspect of the situation. Understanding that technology isn’t just a support role and a strategic facilitator of supply chain resilience is at the core of every change. 

Companies need a comprehensive, end-to-end understanding of their supply chains to identify weaknesses, optimize workflows, and create adaptable plans. All of these can be achieved with the help of digital tools and technology.

The Importance of a Resilient Supply Chain

The supply network’s ability to withstand disruption and bounce back defines its resilience.

When supply chain interruptions occur, a robust supply network can mitigate its effects.

Several aspects of the supply chain and the organization’s resilience are vulnerable to operational risk and disruption. Global catastrophes like the COVID-19 pandemic significantly affected suppliers, labor markets, and supply chain logistics. Unexpected competition, abrupt market developments, or even quick shifts in consumer purchasing habits can cause supply chain disruptions.

Risk management has been challenging for as long as supply networks have existed. Even a minor issue in a remote area could jeopardize the integrity of a worldwide supply chain. 

Therefore, there is an excellent chance of broad supply chain disruption during significant global trends and events. With labor shortages and inventory depletion expected to have long-term impacts well into the future, the pandemic demonstrated this reality in a way never seen before.

_{Top 7 Benefits of Supply Chain Resilience – 3SC (3scsolution.com)}

A resilient supply chain can enjoy improved efficiency, lower costs, and higher service standards. These all come with the capacity to proactively manage and optimize supply chain operations in the face of interruptions.

Demand prediction can help businesses guarantee enough capacity provisioning for demand fulfillment by working backward throughout the supply chain. This proactive strategy optimizes orders, routes, and lead times to maximize efficiency throughout the supply chain.

Resilient strategies involve lowering manufacturing, distribution, and procurement expenses, resulting in more considerable savings.

Supply chain resilience enables companies to take advantage of opportunities to prioritize orders that increase revenue to improve supply chain flow. Additionally, it makes it possible to detect bottlenecks in real-time and take proactive measures to resolve them, helping to avoid interruptions before they affect production.

Better services in availability, accessibility, and on-time delivery result from increased resilience. It is easier to make smarter decisions on whether to purchase or wait for supplies. Company resources are used efficiently with data-backed procurement and fulfillment.

Emerging technologies such as 5G, quantum computing, and autonomous vehicles are potential tools to help build supply chain resilience.

Although obstacles exist in data security, integration, and change management, supply chain managers and leadership must acknowledge that digital transformation is vital.

This process improves cooperation, integrates sustainability, and promotes a tech-savvy workforce. By following this procedure, any business can be sure to be proactive, well-prepared, and equipped to handle a wide range of expected and unexpected issues. In a complicated and unstable environment, resilience is more than just surviving. Businesses need to think about succeeding and constantly developing effective strategies.

Five Steps to Building a Resilient Supply Chain

Supply chain resilience focuses on managing and adjusting to unforeseen circumstances throughout the whole risk spectrum. 

Most resilience solutions focus on improving your knowledge of your operations, creating backup plans, and taking preventative action to reduce possible risks. 

_{Resilient Supply Chain: The Future of Business | SAP}

However, remember that no two operations are the same, and neither are their operational models or associated challenges. Business leaders must choose and modify the best techniques to fit their unique requirements.

1. Reshoring and Nearshoring

Reshoring, also known as backshoring, is the practice of returning manufacturing or other operational processes to the nation of origin of the business. It can involve moving to domestic suppliers rather than purchasing products or resources abroad (known as regional or local sourcing).

Relocating production or obtaining supplies from suppliers in nearby nations is known as “nearshoring.”

These tactics shorten your supply chain and protect yourself against delays in international freight transit.

Reshoring/nearshoring is primarily an operational technique when modifying how you work. Technology can only assist and streamline your operations; the tools you use will be determined by how your supply chain is set up. 

If you’re using a supply chain management (SCM) system, you’ll want to add new modules with specific functions or improve some of its existing capabilities.

For instance, to supervise the flow of products, you’ll need the help of a transportation management system (TMS). A TMS’s additional capabilities include providing ways to contact carriers and suppliers and tracking the progress of your shipments.

2. Supplier Diversification

Any diversification initiative should aim to lower risk. Diversity entails producing in several locations or countries or procuring from various sources. This will decrease the likelihood of relying on only one supplier for essential parts or supplies.

Determine other providers and establish connections with them beforehand to establish a redundancy and protect your procurement. Assess your partners’ performance frequently.

Using AI-based supplier management tools, you can audit your supplier network, evaluate their performance, and discover risks before problems arise. Regularly monitoring a partner’s performance helps identify persistent issues or drops in productivity, which can be red flags for a potential disruption. 

Using this software, you can grade your partners and assess the risks each provider poses. It awards ratings based on several factors, including historical performance, delivery schedules, product quality, and dependability. Once the platform has identified and assessed the risks, it can assist in developing mitigation tactics, like establishing stricter quality controls or contingency plans.

3. Data-based Decision Making

It is nearly impossible to predict all supply chain problems accurately. However, forecasting is still an indispensable tool for decision-making in a resilient supply chain.

Suppose that demand is the most crucial factor in your planning. Demand forecasting comes in two basic varieties. One is a conventional strategy built on statistical techniques. It performs well in market stability but can be lacking during times of uncertainty. Machine learning algorithms help make accurate forecasts in erratic markets. Sophisticated analytical tools can provide reliable data, replacing estimations and “guesstimates. It can predict changes in the market and modify your marketing, capacity planning, and procurement strategies accordingly.

Demand forecasting software produces short- and long-term projections for various product categories or individual goods. Planning across several regions and sales channels is supported. You can model and contrast many hypothetical situations, such as introducing new goods, organizing a campaign, altering costs or selection, etc.

4. Inventory Buffers

A just-in-time inventory management strategy was once widely adopted by businesses to reduce holding costs. However, it was highly susceptible to supply chain disruptions.

Many companies adopted a just-in-case strategy and increased their inventory of essential parts and supplies throughout the COVID-19 pandemic. They could better deal with disruptions by keeping a bigger safety stock.

It’s vital to find a balance between excess stock and carrying costs. The solution to this challenge lies in data-driven inventory optimization.

The foundation of modern inventory management software (IMS) is advanced demand forecasting and predictive analytics. You can mitigate the risk of shortages or surpluses by proactively adjusting your inventory levels based on precise projections.

5. Better Supply Chain Visibility

You can’t adjust to market conditions without a thorough grasp of internal and external circumstances. Management must know what is happening along the supply chain to maintain control or react quickly to disruptions. Making decisions is now more dependent on reliable data rather than guesswork.

With supply chain control towers (SCCT), you can see your operational workflows in real-time and from start to finish. All of the products can be tracked and traced at every turn and through every step of the supply chain. Manage spending and keep an eye on your performance, all while having full access to information about your partners and your interactions with them. A holistic view of your supply chain will help you make more informed decisions. 

The integration of digital and technological solutions is the first step in building a resilient supply chain. Organizations can cultivate a culture of collaboration and develop flexible, tech-savvy workforces while integrating sustainability measures by understanding supply chain challenges. Businesses can put themselves in a position to weather a wide range of problems by implementing scenario-based resilience strategies and data-driven decision-making.

ZhenHub offers tech-driven logistics solutions as the foundation for a resilient supply chain. Get complete visibility into your entire operations. Bring your products closer to your customers with a global network of fulfillment centers. Sign up at our website for access to our online dashboard. Contact our fulfillment experts and learn more about our logistics software.