The last two years have seen global supply chains placed under significant pressure.
Until recently, supply management has been very much focused on efficiency and minimising cost. Unfortunately, this has left many supply channels exposed to demand volatility caused by COVID 19 and its mutations. Particularly, those supply channels heavily reliant on just in time inventory management.
What executives now know is that a supply chain must have requisite levels of resilience and agility to cope with unexpected volatility in demand and supply.
A recent study by the World Economic Forum determined 88% of leading global companies were not sufficiently protected against future supply chain disruption.
What is supply chain resilience?
Supply chain resilience can be described as the capability of the supply process to resist, adjust and recover from supply chain disruption.
When interruptions occur, supply chains can encounter,
- location and capacity limitations
- reduced visibility of inventory levels
- significant product mix changes and modifications
- product supply pressure
- logistic challenges.
To build resilience in a supply chain it is important to action the following,
- automate any manual processes
- ensure all supply chain information can be efficiently transferred within the business operating system.
- product sourcing strategies are diversified
- scenario planning is undertaken in the event of possible future disruptions
- improve customer visibility of the complete supply chain
- use “buffers” of inventory to avoid shortages
- hold inventory in multiple locations.
Preferred outcome
The preferred outcome is the development of a supply chain that is not only efficient, but also more resilient to an increasingly volatile commercial environment.
The globalisation of trade has seen the complexity and strain placed on supply chains continuing to rise, with the goal to keep economic cost to a minimum. However, with increased globalisation comes enhanced exposure to supply disruption. In addition, labour shortages, in part due to COVID self- isolation, have also significantly affected supply and procurement locally.
The pandemic has shown that a more resilient supply chain is a necessity for business success.
Contact us
If you would like to improve the resilience of your business’ supply chain please contact us for an obligation free consultation.