How to Accelerate Your Supply Chain Resilience Strategy
If you’re among those who feel that the threat of disruption is higher than ever in the manufacturing industry, you are not alone.
According to Statista, “In 2021, North America was the region with the highest share of disruptive events at 47 percent. In that same period, the number of supply chain disruptions reported worldwide amounted to 11,642 disruptions.”
That’s why it’s critical for you to create a supply chain resilience plan and implement a risk management strategy today.
A well-developed supply chain helps you develop products or services that meet customers' needs. Developing a new product or service can take as long as two to three years. A typical lead time for a supply chain is 25 to 40 weeks.
Increasing resilience can lead to greater supply chain resilience and increased competitiveness. While increasing supply chain resilience is costly, the alternative may be worse - not only is it risky, but it can be a difficult sell to senior management.
Resilient supply chains can be recovered from disaster and can even become a source of competitive advantage. They will have higher levels of security, which can help you to expand into new markets and value segments.
Strategies
There are five major strategies to improve resilience. The simplest, and perhaps most popular, is to create buffer capacity. This method will be costly, though, so supply chain leaders may find it difficult to justify the costs.
Next is understanding your data. Taking a more strategic approach to managing your supply chain risk, you can leverage data analytics and information to stay ahead of potential problems. Use your data to isolate opportunities to drive greater efficiencies that could lead to reduced costs and quicker response times.
Compliance is getting more complicated and cumbersome. Keeping tabs on regulatory changes and working with an informed business partner is one key to helping you manage compliance.
Changing the way you think about risk—from a negative to an opportunity and strategic component—can also create value for your organization. Review existing processes, like initial due diligence, vendor selection, off-boarding, and more to gauge the likelihood of failure. Then, rebuild those processes, making them in a way that identifies disruptions before they occur.
Finally, flexibility and being nimble are pillars of success. Develop and implement contingency plans and backups for the inevitable. Participating in a risk assessment activity can help you to flush out potential problems and create solutions before the risk occurs.
How can a supply chain build resilience?
The first step is assessing suppliers and diversifying their networks. From there, a company must develop a crisis response team. It is also necessary to document processes and create a single source of truth. Additionally, companies should stay up-to-date with current events and create multiple contingency plans.
Supply chain resilience can be achieved through multiple venues and designs. A company that relies on a few suppliers may not be able to respond quickly enough if a disaster occurs. If it is an outlier event, the company should invest in the infrastructure and training necessary to deal with it. Then, it will be more likely to avoid disruptions. This will also help the company manage its supply chain and build resilience. It will ultimately depend on the business and market strategy of a company.
A mature supply chain risk management strategy will be able to adapt to disruption while satisfying its customers. It will be able to react faster to market changes and supplier changes with the best possible data. The use of smart supply chain management tools is increasingly popular and can provide many benefits to an organization. However, a well-developed risk management strategy will ensure that a supply chain is not only a good fit for a brand, but that it is also an effective way to improve a company's reputation.
In addition to assessing risk factors, purchasing managers can also use a simple risk assessment system to rate suppliers.
Jack Cunningham, a purchasing manager at a global consumer products company, assigns each supplier a score from one to five. With this information, he can compare each partner against the other. For example, a purchasing manager can evaluate the risk of a new partner if it can reduce the risk of the original supplier.
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Creating a resiliency plan is not a walk in the park. That’s where our team comes in. We can help you to know about and to understand the regulations you face while helping you to create a plan that reduces risk.
Give us a call today to help you plan for tomorrow.