How to Build a Resilient Supply Chain

How can you measure the success of a supply chain?

Is it for the goods brought to the businesses? Maybe, you feel comfortable because the prices are quite competitive or perhaps it’s because you have been working with that specific supplier for a long time. 

Well, while all of those are valid reasons to believe that your supply chain is on the right track, it might not be sufficient to say that it can stand the current challenges surrounding supply chains. 

That’s why we need to learn and discuss more about resilience. How can companies build a really resilient supply chain?

Supply Chain Resilience

Resistance and recovery

Those two words can help you understand what a resilient supply chain is about. In the face of challenges, companies must be prepared to keep going and recover with few to no negative consequences. Yes, COVID-19 was a one-of-a-kind global disaster, and while we might not have a new pandemic in the future, supply chains all over the world are still dealing not only with its impact but also with climate change, political unrest, and a market that’s changing now more than ever. 

Differences between a Vulnerable and Resilient Supply Chain

• Vulnerable: Business can easily be affected by constant disruptions of service 
• Resilient: Business work to prevent and manage possible disruptions 
• Vulnerable: Poor relationships with suppliers due to a lack of strategy 
• Resilient:  Higher levels of collaboration with suppliers bringing more growth opportunities. 
• Vulnerable: The profitability of the whole business is at risk. 
• Resilient: Cost optimization contributes to better profits.
• Vulnerable: Dramatic increase in spending to recover after a crisis. 
• Resilient: Proactive in the business’s preparedness.

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Elements of a Resilient Supply Chain

Diversity

So do you have a trusty group of suppliers in a couple of locations?  That’s wonderful, but do you ever stop to wonder what could happen to your supply chain if something were to happen in those areas? Maybe inflation hits harder there and the prices skyrocket overnight, maybe a flood leaves the zone without power, maybe…You get the idea, right?  

There are a dozen scenarios that could impact the rhythm of your operations, you can’t predict when and what will happen, but you can be more prepared by diversifying your supplier network as much as possible, this way if something happens in one area you have a plan b as backup. 

Technology

Yes, nobody can predict the future, but that doesn’t mean you can’t get some foresight using the right tools. Utilizing technology like data analytics, IoT, and AI, can help you gain real-time insights into your supply chain operations, giving you the opportunity to learn about any potential issue way before it becomes a serious problem. 

Flexibility 

Perhaps one of the most defying features of a resilient supply chain is flexibility. It’s just how nature works, remember? Those who adapt survive, well, for businesses is no different. Having alternative transportation methods, adjustable production schedules, or varying inventory levels will transform your supply chain so it can adapt quickly to changes in demand or supply.

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Benefits of Resilient Supply Chain

Risk mitigation

Not a huge surprise here, with a resilient supply chain, the whole point is to allow your business to be better equipped to handle unexpected disruptions. By diversifying your suppliers and implementing solid risk management strategies, you can quickly adapt to changes, minimizing potential losses.

Operational efficiency

Think it through this fact, resilient supply chains work particularly well using technology, and it just happens that one of the key advantages technology has for procurement is efficiency. Improving your operations while at the same time strengthening your abilities to respond to sudden changes in the market or the planet. 

Customer Satisfaction 

On one side you have customers expecting timely deliveries and consistent product availability. On the other, you have customers who are constantly showing a preference for companies that choose to work with diverse and local suppliers. A resilient supply chain helps you meet these expectations, leading to higher customer satisfaction. When you can respond quickly to demand fluctuations, you build trust and loyalty. 

Competitive advantage 

Building a resilient supply chain it’s not just about being able to stand against the challenges, it’s also about giving your company a boost in the face of competition. It could be that you are the one who’s capable of working with normality while your competitors are struggling to manage its operations with a broken supply chain. 

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How to Implement a Resilient Supply Chain?

Assess your current state 

Before getting too excited about building a stronger supply chain, you’ll need to go over your current processes and understand what is going well and what could be improved. It’s the only way you can develop a strategy tailored to what your business and industry demands. 

Diversify shipping network 

You can buy all the high-quality products you want, but if these don’t arrive on time, everything can be quickly ruined, including your client’s expectations. With a more challenging weather these days and oil prices still going upward, companies need to develop alternative plans for transportation and storage. Find other methods or work in new locations so the delivery of your materials is not affected as much. 

Keep an eye out for your inventory 

The first thing that’s directly related to your supply chain, is your inventory, if what were you expecting to arrive, suffers a delay, your inventory levels could drop without warning. The solution? Discover how much extra stock you need by looking at past demand and delivery times. Using AI tools can also help you adjust your orders and production schedules automatically based on changes in demand and supply risks. It's important to maintain open communication with your suppliers, sharing data to improve your inventory management and purchasing

Use technology 

Remember what we said about forecasting? 

Well, the first step to making accurate predictions is to rely on accurate data. 

start by tracking and analyzing your logistics data with digital software. This way, you’ll get real-time updates on where your shipments are. It’s also a great idea to share data with your customers, suppliers, and logistics partners through easy technological integration. When sourcing for new products, consider choosing suppliers that are open or better yet are already using technology. 

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