What is a Resilient supply chain?
A resilient supply chain is a smarter supply chain that has learned to adapt itself to continuous disruptions. These supply chains are those that can scale to meet new demands as and when the customer needs change. They are more reliable, tune in well to volatilities and help build the necessary trust between the manufacturer and the final customer. A resilient supply chain has great visibility and the agility to shift sourcing, manufacturing and distribution activities around fairly rapidly.
A recent study by Gartner suggests that only 21% of manufacturers believe that they have a highly resilient network.
As the manufacturing world goes through several tides of changes owing to the global pandemic, it is imperative that companies balance the resilience supply chain and efficiency to secure their networks. While most supply chain leaders recognize that becoming more resilient is the need of the hour, existing challenges such as alternative factories, manual processes and the lack of adequate real-time data to drive decisions, can prevent the creation of lean supply chains and resilience.
The rebalancing of supply chain efficiency and resiliency here is not an easy task. Most of the time, increased resilience comes with additional costs and additional resources which may be difficult to achieve.
Having said this, despite being fragmented, supply chains can become resilient over a period of time. By focusing on the fundamentals such as people, processes, and technology, manufacturers can steer their way through disruptions and build a more resilient, longer-term digital operations strategy along the way.
Here are the top 5 strategies that most supply chain leaders adopt to build greater resilience supply chain network:
1. REDUCE REDUNDANCY
A resilient supply chain is built on the premise that redundancy is acceptable, but only to a certain limit. Resilient networks can be built by creating redundancies to an acceptable extent, throughout the supply chain. The manufacturer can always stock extra inventory, maintain low capacity utilization, and have multiple suppliers. Although redundancy can provide some breathing room to continue operating after a disruption, usually it is a temporary and very expensive measure to have. Most manufacturers have to pay for redundant stock, capacity, and workers. Moreover, such excess capacity is likely to result in inefficient operations, low quality, and significant cost increases. This restricts the organization from creating agile and resilient supply chains.
2. BUILD FLEXIBILITY
Building flexibility is another way to create Resilient Supply Chains in Manufacturing, with increased supply chain flexibility, manufacturers are able to withstand significant disruptions and are in a better position to respond to demand fluctuations. Having standardized processes, manufacturers can easily move production among plants using interchangeable and generic parts in many products. Similarly, using simultaneous rather than sequential processes across product development and distribution can speed up the recovery and benefits of improved market responses. Finally, it is important to align the procurement strategy with supplier relationships to create deep and strong relationships with the supplier network.
3. DIGITIZE PROCESSES
One of the easiest ways to achieve resilience across supply networks is to digitize as many operational processes as possible. However, due to the complexities involved in overhauling a vast network of global paper-based processes and siloed operations, many organizations avoid digitizing the entire supply chain. On the other hand, those companies that take the leap of faith and implement digital supply chain practices, do see immediate and long-term benefits. Digitizing operations can easily unlock vast records of real-time valuable data that manufacturers can use to make decisions about production and critical capabilities in today’s crisis.
4. CREATE A SINGLE-SOURCE OF TRUTH
From a technology perspective, creating a centralized incident management system can help systematically capture issues, with clear accountability and supply chain context. Having a single source of truth can enable faster problem-solving and also ensure that all key stakeholders are involved in the decision-making process. Most importantly, it is also equally equipped with the latest updates. After all, decisions are only as good as the data that guides them, and having fragmented sources of this data doesn’t help.
5. IDENTIFY VULNERABILITIES
For a resilient supply chain, you need to identify Vulnerabilities, most supply-chain vulnerabilities manifest in areas such as planning and supplier networks, transportation and logistics systems, financial resiliency, product complexity, and organizational maturity. A good understanding of the supply-chain risk considers these underlying vulnerabilities in the supply chain that can make it fragile. It also looks into the level of exposure or susceptibility to unforeseen events that can exploit these vulnerabilities. Therefore a healthy supply-chain risk assessment can eliminate vulnerabilities and help seed the much-needed resilience.
Artificial Intelligence and Digitally Driven Resilient Supply Chains
A recent study shows that 84% of supply chain leaders feel that “lack of visibility” across their supply chain was the “biggest challenge” they are currently facing.
The COVID-19 crisis could be a tipping point in the transition to new technologies to power supply chains. With so many new innovative digital platforms and applications that have emerged in the last few years, manufacturers now have a clear path to help establish an interconnected network of what today are largely discrete, siloed supply-chain steps.
A digital supply chain improves transparency and responsiveness because every activity is able to interact with one another in real-time. AI-driven technologies are helping manufacturers improve visibility, avoid disruption, respond more rapidly, and build better, more resilient supply chains.