Building Supply Chain Resilience: Top Strategies and Techniques
In order to remain competitive and resilient in this challenging environment, businesses need to focus on building ...
In order to remain competitive and resilient in this challenging environment, businesses need to focus on building supply chain resilience. But, simply making a few tweaks to your current strategy isn't enough. Instead, it involves implementing multiple, often concurrent, strategies to build resilience across your entire supply chain.
This blog explores the basics of organizational and supply chain resilience and outlines the top strategies and techniques businesses can use to build supply chain resilience.
The Basics of Organizational and Supply Chain Resilience
Create Supply Redundancies
Creating supply redundancies means that you are storing up more of the items you need to produce your goods or services. This could include extra inventory, vital equipment, or the components to fix broken equipment. Such excess may seem counterintuitive to popular lean production strategies. However, it ensures business continuity when unexpected situations strain companies' ability to get necessary resources. It's not about having more of every resource, just having more of the right resources.
Maintain Multiple Suppliers
Collaborating with a single supplier has its benefits, including strong relationships and cost incentives. However, the supply chain disruptions have exposed the vulnerabilities of relying on one or two favored suppliers. Working with multiple suppliers creates more flexibility and fewer bottlenecks when shutdowns, shortages, and/or restrictions occur. If each supplier knows that it's not your only option, they may offer you competitive pricing and improved service.
Diversify Carrier Networks
The reasons for maintaining multiple suppliers hold true for diversifying carrier networks. Major shipping delays, caused by increased demand and port lockdowns, have shown that relying on one or two main carriers does not work. If a carrier becomes incapacitated for any reason, your business is left scrambling for alternatives.
Businesses that contract with multiple shipping carriers (e.g., UPS, USPS, FedEx, or private carriers) are ready for whatever comes their way. An article by LJM Group, a parcel contract negotiating company, notes that the multi-carrier approach will "give you the power to more efficiently fulfill orders" and help you mitigate risk, remain competitive, accommodate customers, manage returns more effectively, and save on shipping costs.
Nearshoring, also called "reshoring," is the practice of decreasing dependence on international suppliers. The advantages of turning to a local supply chain model include:
- Reduced points of potential conflict or disruptions from unexpected events.
- Greater control over inventory.
- Closer proximity of producers and consumers.
- Reduced freight
The above-mentioned approaches and ideas to enhance your supply chain are only successful if your entire team is on board. Disruption management requires a company-wide effort. Everyone will be better equipped to respond decisively to disruptions if they are aware about both local and global developments.
Utilizing digital platforms that promote transparency, collaboration, and organization-wide communication may keep your team disciplined, focused, and organized even in the face of interruptions. You and your teams will be able to view every facet of the business and make adjustments to rules, procedures, and processes based on facts, not speculation, as opposed to acting in a reflexive manner.