Supply chains pushed global efforts as far as they could over the past decade, and we’re now seeing many weak links laid bare. Ongoing trade tensions and the COVID-19 pandemic have highlighted vulnerabilities that were further exacerbated by significant production shifts, consumer spending, and economic volatility.
Resilience has become a new focus across every industry and company department. Just ask your internal auditors about their efforts to manage and predict risk during shifts to remote work, new digital tech, and shifting supply lines.
Supply chain experts are prioritizing security and the ability to maintain baselines that support safe expansion. Retooling chains is a long and arduous task, but it is possible and can be a significant positive for operations and revenue when resilience is achieved. To get started, here are five requirements for the modern, resilient supply chain.
Collaboration and communication tools
Past focuses on logistics speed, mostly concerned inventory or raw material utilization in just-in-time frameworks for manufacturing and fulfillment. We need to shift that to prioritize data and communication in the near term.
End-consumers have been clamoring for faster data, especially real-time tracking of their e-commerce orders that are becoming more and more centered on two-day, one-day, and same-day fulfillment. Your business deserves the same speed of data.
Invest in collaboration tools that make it easy to understand your supply chain at a glance. Share data your partners need and ask for information in return. Visibility upstream and downstream allows you to see patterns and predict trends that can help you avoid stockouts or build up excess inventory. Seek out bottlenecks in the process and information to help you plan.
In February, you likely threw out the year’s demand forecasts. However, you kept tracking and collecting data. Rely on it and share what’s essential for your production and distribution partners. Supply chains, especially global ones, are complex partnerships with many moving parts and associated data. The best way forward is to share and actively participate in supporting the ecosystem’s overall growth.
A core aspect of redundancy is replacing a damaged or broken link in the supply chain. The faster you can replace it, the better. That makes creating redundancy in supplier networks a core action for building resilience.
Eliminate as many single sources in your supply chain as possible. Critical components, core products, equipment parts, raw materials, and other goods can be a point of risk when you only have one option. With data tools now available, look upstream multiple tiers as well. Having two product suppliers that rely on the same company for raw materials or specific components may not give you as much resilience as you hoped.
Finding vendors and creating relationships takes time and money. However, you’ll be thankful for that protection during the next round of closures due to illness, natural disaster, country strife, or another significant event. We also recommend running multiple fulfillment options and splitting some inventory to prevent a local issue from halting your last-mile efforts.
Room to grow
The COVID-19 pandemic created many capacity crunches across the fulfillment process. One that took companies by surprise was a shortage in warehouse space. Even as companies struggled to ship goods to customers and retail partners, they continued to fight for any available shelf.
Warehouse expansion and new facility construction are expected to pick up significantly over the next few years, in part to support the growth of e-commerce. That may eventually help reduce the capacity limitations, but for now, we still see logistics real estate demanding soaring prices.
Start to review your operations and places where you might expand storage and support growth potential. As noted above, diversifying your fulfillment can help by shifting the space burden to companies that commonly allocate revenue for physical expansion. Look for partners who might have locations you can share or utilize during a surge.
Don’t forget physical security
Many supply chain discussions focus on the technology that powers modern efforts. You can do a lot with cloud services to communicate, share, and speed up your response times, which is incredibly essential. However, don’t neglect the physical aspects of your production, facilities, and overall supply chain.
For example, if you have production lines or utilize specific equipment that is replaced often, look for opportunities to use models built with standard components. Eliminating custom parts that aren’t necessary gives you a broader supplier pool.
Most companies have assets that are at risk from natural disasters and other physical harms. Consider hardening these as appropriate. Regions prone to flooding should look to move electronics such as air conditioning and cooling units off the ground level. Burying utility lines can protect against wind. Bulkheads can secure locations where hurricanes are common.
Build the strength you need.
Training for a fast response
Processes, tools, and upgrades can get you far in an abstract response to the next big disaster. Without planning, however, you never move into the reality of a rapid response. Train your team on these tools and systems for how they usually operate and what functionality changes during an emergency.
Train and test information sharing and processes when a supplier or partner has an issue. Define responsibilities clearly so teams know their roles and who to rely on when they need help. Create scenarios based on region, partner, and type of disruption to thoroughly test your company’s response. These wargames help companies identify gaps and ultimately mitigate risks and protect people as well as revenue.
Resilience lives in planning and training, especially when your supply chain is a global effort.