Supply chain resiliency in every link

To counter these debilitating forces, business leaders must focus on forging supply chains that can withstand the test of our times. But how? And where is your attention most merited?

While no two supply chains are exactly alike, the pressures they are under are similar. Broadly speaking, a focus on bolstering supply chain resilience carries the most weight in counterbalancing supply chain pressures.

Risk demands supply chain resilience and responsiveness

The disruptive, lingering effects of the pandemic have laid the groundwork for urgency, accentuated by recent uncertainties that threaten operating environments. This has elevated risk to an all-time high — both in degree and frequency.

To mitigate this risk, leaders must, in equal measure, enhance supply resilience and increase flexibility. Quick action and proactive thinking are imperative, and can help mitigate the impact of supply chain shocks.

A solid starting point is undertaking thorough risk assessments across your supply chain. What are your weakest links? What current strengths can you leverage elsewhere throughout your supply chain? 

Don’t put all your links in one basket

While centralization can increase supply chain resilience, greater resilience results from diversification, dual-sourcing and localization.

Working this approach into your supply chain strategy mitigates risk. A single supplier with a single problem can be singularly disabling to your supply chain. Through dual- or multi-sourcing supplier relationships, you can compensate accordingly rather than relying on one fully. In short, redundancy reduces risk.

Consider, too, how expanding in-region supplier bases (i.e., localizing the supply chain) can bolster resilience. With shorter distance, often comes less risk. Particularly when you consider geopolitical impacts on supply chains, this is a wise strategy in today’s operating environment. Many multinationals are using this approach successfully to mitigate risk.

These diversification strategies offer additional value that executive leadership should take note of. Benefits beyond supply chain resilience: enhanced cost savings, reduced inefficiencies and the ability to pivot quickly.

Endure disruption through supplier relationship management

Establishing strong, resilient supply chains hinges on leadership’s ability to establish definitive strategy and take purposeful action. Yet, taking resilience to a new level takes something altogether intangible: robust supplier relationships.

Specifically, elements of a strong relationship include trust, support, collaboration and transparency. While they add value, you won’t see them listed among other KPIs.

When the supply chain is disrupted, these relationship-centric elements fill in the gaps, enhance speed to recovery, and ensure continued operations — and not just yours. If a supplier experiences a challenge, that’s an opportunity to support them, making the relationship all the more robust.

Many supply chain leaders are in addition realizing how supplier relationships foster and drive innovation. By working collaboratively, your approach to shared challenges follows suit, prompting the unified approach: “How can we innovate through this issue?”

No matter the perceived value that robust relationships may bring, establishing long-term agreements with suppliers can engender a mutually beneficial working environment.

Resilient and ready for what’s next

Your efforts in building resilience in your supply chain must be cultured to your organization’s individual operations, footprint and other considerations like strategy for the enterprise, as well as your tolerance for risk.

Regardless of the approach, leaders should consider how technology and data can enhance that journey.