Unlocking the Secrets to Supply Chain Resilience
Supply chain resilience is a critical aspect of business success. But the recent pandemic has highlighted its importance even more. According to a McKinsey report, to thrive in a constantly changing market, businesses must implement strategies to ensure a resilient supply chain. However, most respondents admit that they still have significant work to do, it states.
“Building supply chain redundancies to ensure resiliency is more important than ever for manufacturers,” says Jenny Smith, CPA, CFE MHCS Director. “If there were another issue like COVID that causes strain on international supply chain, manufacturers need to be ready.”
Four Essential Strategies
Here are four strategies for creating a more resilient supply chain.
Asset-Light Solutions to Liberate Capital
Choosing asset-light supply chain solutions can free up capital for strategic decisions. Here are two examples of this in action.
ECR4Kids, a children's furniture brand, outsourced their fulfillment and saved nearly $700,000 annually, allowing them to focus on product development and customer experience.
Amazon also took a unique approach to an asset-light solution by liberating nearly 10 million square feet of excess warehouse space in 2022. In doing so, they unbound capital and increased their ability to make quick decisions around product development, customer experience, and marketing spend.
Flexibility with Strong Partnerships and Scalable Tech
Flexibility is a relatively new key to manufacturing resilience and should be built into every link of the supply chain.
LS2 Helmets, a motorcycle helmet brand, used a flexible warehousing partner (Ware2Go) to expand into new markets. "Having a flexible partner enabled us to mitigate risks and fuel our growth," said a spokesperson for LS2 Helmets.
According to Ware2Go, “The result for merchants is a customized solution based on their business objectives and inventory requirements that enables them to compete and scale at an enterprise level.”
Flexible transportation and fulfillment solutions are also crucial. McKinsey reports, "Two-thirds of corporate buyers now rely on digital and remote channels throughout their purchasing journey." To create a resilient supply chain, manufacturers must have the capacity to fulfill orders from multiple sales channels through a single platform. Scalable technical solutions can help provide that solution.
Channel Diversity
Diversity in partners and suppliers can help maintain stability in times of disruption. For instance, businesses should consider nearshoring or contracting with multiple suppliers to reduce dependency on a single source. Additionally, having alternate shipping lanes and a distributed warehousing network can help circumvent regional disruptions. Network diversity can also be helpful on a warehouse level, especially when it comes to service disruptions cause by weather, power grid outages, services disruptions, and more. With channel diversity you can redirect orders through your warehousing network.
Switching from JIT to JIC Procurement
Switching from a just-in-time (JIT) procurement model to a just-in-case (JIC) model can reduce your need for large amounts of standing inventory. It also helps you to focus on fast-moving, top-revenue drivers for your business, which results in increased margins, decreased storage costs, and simplified inventory distribution.
In conclusion, supply chain resilience is crucial for manufacturing business success. Implementing asset-light solutions, prioritizing flexibility, creating diversity, and managing inventory effectively can help you navigate disruptions and maintain growth.
If you are considering change to your warehousing or supply-chain model, reach out to us to ensure that you are maximizing your investment and tackling the tax requirements head on.