Supply Chain Resilience
Supply chain resilience is defined as the ability of a business’ supply chain to resist unexpected risk and recover from disruptions with minimal impact on production, revenues, and consumers. A resilient supply chain has three core features, such as:
- Anticipating and detecting potential threats through early warning signs
- Surviving disruptive events with minimal losses
- Reverting to normalcy quickly after the event
The importance of supply chain resilience
Supply chain resilience minimises financial and reputational risk to businesses, improves productivity, and lends a competitive advantage to enterprises. Business operations are always at risk due to disruptions stemming from unforeseen circumstances. Some causes of supply chain disruptions include:
- Natural disasters
- Geopolitical events
- Logistics failures, such as delayed transport
- Price fluctuations
Supply chain disruptions can lead to shipment delays, revenue loss, quality issues, and consumer dissatisfaction. Resilient supply chains enable businesses to develop adaptive strategies to cope with risk and recover quickly from upheavals.
What enhances supply chain resilience?
A good supply change resistance policy focuses on disruption avoidance, besides planning the best defence against uncertainty. The key factors that enhance supply chain resilience are:
Supply chain planning
Diversifying suppliers and manufacturers
Implementing inventory buffers
Leveraging big data
Supply chain planning measures such as improving sales and operational processes, defining performance metrics, demand forecasting, and demand management increase supply chain resilience.
Although limited networks are more economical and reduce logistical complexity, disruptions in one area can destabilise all operations during crises. Having multiple partners across the supply chain can help improve resilience.
Although lean inventories garner profitability in peaceful times, they offer no security against emergencies. Businesses can stay resilient by implementing inventory and capacity buffers.
Leveraging digital solutions allows businesses to automate supply chain networks and get real-time insights into disruptions. Resilient supply chain technologies deploy artificial intelligence (AI) and machine learning (ML) to build predictive analytical models for demand forecasting, inventory management, and predicting market trends.
Strategies to improve supply chain resilience
Supply chain resilience is essential for any business to cope with disaster and restore normalcy quickly and efficiently. Some steps to enhance supply chain resilience are:
- Identify potential risk factors across all operations and develop strategies to address vulnerabilities and mitigate risk ahead of time.
- Review your product design to maximise adaptability and enable future-proofing. Redesign legacy products to match the latest design standards, future consumer needs, and evolving market trends.
- Develop a business continuity plan by designing infrastructure and defining roles and responsibilities with disaster possibilities in mind.
- Invest in digital solutions that afford greater visibility into the supply chain and improve collaboration with partners and suppliers.