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Build More Resilience into Your Supply Chain   Featured

Build More Resilience into Your Supply Chain    "Stop & Smell the Roses"

Risk management is one of the critical areas in supply chain and procurement. At the heart of this is the development of resilience of strategies to safeguard supply chains, ensuring business continuity. With the ongoing coronavirus pandemic, it is clear that the lack of a comprehensive resilience plan can lead to challenges of high magnitude for businesses. As such, it is crucial to have a plan that comes into play if a problem, such as a disaster, occurs. Supply chain resilience is the ability of a supply chain to prepare for and adapt to unexpected events. The resilience plan, therefore, leads to the adjustment of the company to sudden disruptive events that adversely affect the supply chain’s performance. To continue functioning during and after disruption, an organization needs a resilience plan that has the following characteristics:

Rapid detection, response and recovery- Under this, supply chains must be able to quickly detect sense and recover from the conditions that can adversely affect the supply chains.

End-to-end, data-driven control of the supply chain- The integration, transparency and visibility of the supply chain are necessary but not enough to enhance resilience. The ability to view raw materials, partially finished products, and finished products from suppliers to customers is critical. However, value needs to be extracted, and action needs to be taken faster before a disruption occurs. To secure these, a company needs to plan. This takes months to determine the kind of data to collect and how the data can be converted into actions for detecting disruption, response and recovery.

Redundancies- Include aspects like emergency stockpiles, safety stocks and diversification of sourcing through offshored, re-shored or nearshored. The suppliers picked should be able to meet the rise in demand when disruptions occur, affecting business continuity.

Strengthening supply chains

Supply chain resilience can be improved by increasing inventory levels for raw materials, manufactured goods, and the final product. This is on top of increasing manufacturing capacity and number and ensuring the surge capability of crucial materials to mitigate potential disruption. While such risk mitigation techniques are expensive, there is an advantage in that they will lead to the resilience of the company’s supply chain and its agility to those of the competitors while lowering the cost. A company’s resilience investment makes it capable of coping with risk. The company’s ability to face risk will depend on the risks that are identified and are of concern to it.

Government’s role in supply chain resilience

Building supply chain resilience is not a single person’s job to do. It requires collaboration between organizations and governments. In the United States, for example, the government’s research and development agenda has enabled companies and government agencies to develop a resilience policy and improve resilience plans for critical military infrastructure and manufacturing. This enables proper interventions in dealing with disasters, including natural disasters and man-made disasters such as cyber-attacks and exploitations, by exploiting supply chain vulnerabilities. Following the Covid-19 pandemic, policymakers are now calling for critical goods such as medical supplies and hi-tech products, and their supply chain has to be re-shored to the US. However, re-shoring such products are difficult and cannot answer all the questions.

In conclusion, efforts to strengthen the supply chain should be made in collaboration with others. Companies could benefit from other institutions such as industry and academia in developing binding best practices. While the private sector has a right to develop its strategies, best practices are not limited to them. Collaboration between the private and public sectors is necessary to deliver products and build resilience.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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