The ability to both resist disruptions and then recover operational capacity after disruptions occur, supply chain resilience has become a hot topic for shippers across most industries. Resilience is always important, of course, but the global pandemic put a much brighter spotlight on the need to be able to more readily identify and respond to new, unprecedented disruptions. Consider these facts:
- The Supply Chain Resilience Report 2020 identified the COVID-19 pandemic as the biggest threat to supply chains—even more than natural disasters, cyberattacks and other threats combined.
- At the time, 60% of organizations said that the pandemic had disrupted their manufacturing supply chains.
- In response, nearly all (96%) of those companies were planning to build more resilience into their supply chains in the coming two years.
These realities make sense in a world where Gartner says 60% of supply chains were designed for cost efficiency—not resiliency. Now, the research firm says the challenge lies in creating an operating model for supply chains that combines the best of both worlds while also delivering supreme customer service.
The Benefits of Technology for Supply Chain Resilience
Getting there isn’t easy, but technology has proven itself to be a great facilitator in the drive to make the world’s supply chains more resilient while also keeping customers happy. In a recent Harvard Business Review article on Leveraging New Tech to Boost Supply Chain Resilience, Kearney’s Suketu Gandhi says global supply chains were designed to operate with high reliability and at the lowest possible costs—all within a “steady state” environment.
That environment has shifted over the last 2-1/2 years and many companies continue to wade through the complexities of an environment that’s more “VUCA” than anything else (volatility, uncertainty, complexity and ambiguity). “Unfortunately, supply chains have lately been unreliable (e.g., the microchip shortage) and expensive (e.g., higher labor, commodities and ocean-shipping costs),” Gandhi writes, “primarily because conditions have been anything but steady.”
In response, smart companies are deploying new technology that helps make their end-to-end supply chains more resilient while also keeping them cost efficient. “…by aggressively understanding the capabilities of these technologies and investing aggressively in them,” Gandhi points out, “companies will be able to bolster the resilience of their supply chains in the months and years ahead.”
Safeguarding A Resilient Supply Chain
If there’s one lesson that businesses took away from the pandemic-driven disruptions, it’s that supply chains need to be much more resilient. And while knee-jerk reactions like holding more inventory and building redundant capacity were fairly common during the throes of the pandemic, these are costly fixes that don’t work for the long-term anyway. Now, more companies are rethinking their systems and solutions and investing in technology that helps them operate more resiliently in any business conditions.
When companies make this move they also gain competitive advantage, according to Insight Sourcing Group’s George Rhymestine. In Having Supply Chain Resilience is More Than Insurance, it’s Competitive Advantage, he writes about the need to safeguard supply chain resilience with the goal of creating networks that:
- Have a capacity for resistance and recovery
- Can minimize the impact of the disruption itself
- And, can then recover quickly from the problem and move on
“Even when the current crisis subsides, there will always be the next one on the horizon, making this a critical component of ongoing planning for corporate executives,” Rhymestine points out. He feels companies should look beyond the fundamental benefits of resilience—less downtime, fewer productivity losses, better continuity of supply—and view resilience as an offensive strategy. Technology can help them do this.
“Looking internally, companies can make significant strides toward supply chain resiliency through investments in technological innovation,” Rhymestine writes. “Logistics technology including software, IoT devices and RFID wireless tagging can provide data ranging from consumer analytics to good tracing and materials handling. Determining where improvements can be made and working together with suppliers to overcome challenges has proven significant cost reductions and supply chain streamlining.”
To improve the resilience of their complex supply chain networks, more companies are turning to supply chain platforms that enable effective collaboration and data-sharing while leveraging digital tools. By using technology to map out supply networks before disruption occurs, for example, companies not only gain better visibility into their supply chain structures, but they can also avoid-last minute scrambling that ensues when disruption strikes.