With the world becoming more connected and businesses seeing more players in the supply chain, one can really ask- what is supply chain resilience? This concept has gained more prominence as organisations strive to navigate disruptions and challenges that can significantly impact their operations.
In this blog, we will delve into the supply chain resilience definition and the critical significance it holds for businesses today. Resilience in the supply chains can prepare businesses beforehand to deal with all sorts of disruptions. Therefore, it is important- nay, critical- to ensure resiliency in a world where disruptions are common.
What is Supply Chain Resilience?
You can define the resiliency of a supply chain by its ability of resistance and recovery. In simple words, it means that it gives the companies power to mitigate supply chain disruptions and limit the impact of the ones that do occur.
The most robust and adaptable supply chains are not only constructed to withstand and rebound from challenges but are also structured with cutting-edge processes and modern supply chain technologies that empower them to predict, foresee, and promptly react to the risks or opportunities that lie ahead in the future.
The Global Approach
Taking initiative to ensure resilience in the supply chain is not only for your company or companies in one area. It is a collaborative effort aimed at enhancing the robustness and adaptability of international supply chains.
Various factors like strategies, policies, and practices to mitigate disruptions, secure critical supply routes- ensure the continuous flow of goods. This, in turn, contributes to economic stability and reliability in a globally interconnected world.
Understanding what is supply chain resilience can help the companies build a supply chain that truly has safeguards from all kinds of threats. To ensure that their supply chain is robust and free from threats and leaks, companies need proper strategies.
Building Supply Chain Resilience
Managing and transforming your organisation’s approach to processes and people are some of the ways you can strategise building a supply chain resilience. Apart from that you need more supply chain resilience strategies to minimise supply chain vulnerability in case there are future disruptions. Here are a few strategies that companies can adopt to build what is supply chain resilience.
- What is the Meaning of Supply Chain Resilience to Your Organisation
Supply chain resilience and its meaning is unique to every company. What it means for yours is not necessarily the same thing for another company. Identify your risk factors and pain points that exist both inside and outside the company.
Next step is to put a plan in place to mitigate risks to ensure protection of your supply chain. Then, figure out what is supply chain resilience to you and your company.
- Review Strategic Product Design
This next strategy is very important in today’s market as it has become a deciding factor for companies to ensure a “legacy status”. Design of products can create an identity for the brand and spread the word about it to the customers.
Designers need to make products more flexible and ready for the future. This will help businesses avoid problems when making products and not having enough parts. So, there must be strategic selection of parts so there are no shortages.
Companies need to make products more flexible and ready for the future. This will help us avoid problems when making things and not having enough parts. So, we have to look at how we choose parts and make sure they’ll be available now and in the future.
Visibility and Stability
What is supply chain resilience without proper visibility. Keeping an eye on available products in the market and increased end-to-end visibility helps to improve the resilience of your supply chain.
The company must also realise that it is difficult to keep product designs stable over a course of 10-15 years. Suppliers might discontinue parts or make fewer of them. Also there is the need for flexibility- including different parts that customers can readily find in the future.
A strategic product design ensures that there will be no need for abrupt design changes. Otherwise, it can set your company back. Apart from designs it is also crucial to have a plan in place for disruptions. Wondering what is supply chain resilience with a continuity plan? Find out below.
- Continuity Plan
The scope of disruption in your supply chain is vast. From natural disasters to geopolitical conflict or product shortages- there will be times when you will have to encounter unannounced crises.
In such cases, it is always better to have a continuity plan in place. A continuity plan takes a look at all the risks and quantifies them. It also comes up with a contingency plan in case you have to deal with such situations. Know what is supply chain resilience and its strategies and how you can achieve it.
6 Strategies for Supply Chain Resilience
- Inventory and Capacity Buffers
One of the most straightforward ways to enhance resilience is buffer capacity. It works best for underutilised production facilities or inventory in excess of safety stock requirements.
Buffers are expensive, but supply chain managers need to justify them to the C-suite. Leading companies use buffers in the form of surge capacity by availing contract workers for their suge needs.
- Manufacturing Network Diversification
Due to tough competition in terms of sourcing or manufacturing bases, many companies have begun to diversify their sourcing. It means that many have switched to new suppliers or maybe urged their existing partners to to supply them with materials from elsewhere.
The reason for doing so is a direct counter to the disruptions in supply chains. For companies, the cost of creating multiple supply locations is just a cost of business rather than being inefficient. Similarly, supply chains also take to multisourcing. Let’s see how it helps.
- Multisourcing
What is supply chain resilience without multisourcing? Due to natural disasters or material shortages, companies can find themselves short of materials if they only rely on one source. That is why they need to multi-source their materials. Multisourcing is an obvious way to mitigate this risk of shortage.
In order to formulate a multisourcing strategy, supply chain leaders must possess a comprehensive understanding of their supplier networks. This entails the ability to classify suppliers not only based on expenditure but also according to the potential financial consequences in the event of a disruptive occurrence.
Diversification is possible by either allocating business to additional suppliers or collaborating with a single or sole-source supplier that can operate from multiple locations.
- Nearshoring
In addition to using multiple sources, some companies aim to reduce their reliance on distant locations within their global networks and speed up the production process. Local or regional supply chains may incur higher costs due to increased complexity, but they offer better control over inventory and bring products closer to end consumers.
- Harmonising Platforms, Products, or Plants
The more regionalised the network, the more essential it becomes to standardise plant technology to facilitate smooth product movement across the network. But what is supply chain resilience when it comes to production of parts of a product?
Standardising components, especially those less visible or critical to customers, simplifies sourcing policies and enables the allocation of larger volumes to multiple suppliers, thus enhancing resilience.
- Ecosystem Partnerships
Diversified sourcing is the need of the hour. Collaborating with strategic raw material suppliers and external service partners is crucial for improved preparedness and resilience.
Companies lacking the scale to establish multiple locations should cultivate strong relationships with contract manufacturers and global third-party logistics providers (3PLs). What is supply chain resilience going to do? It will diversify production and distribution across different countries.
FAQs: What is Supply Chain Resilience and its Significance
What is supply chain resiliency?
Supply chain resiliency refers to the capacity of a supply chain to withstand disruptions and swiftly recover, ensuring continuous operations and the ability to adapt to unforeseen challenges.
How can visibility help build resilient supply chain networks?
Visibility in supply chains enhances resilience by providing real-time insights into inventory, demand, and potential disruptions, enabling proactive decision-making and quicker response to challenges, ultimately bolstering network adaptability.
How can supply chain leaders improve resilience?
Multisourcing is one way to improve resilience in a supply chain. Through multisourcing, supply chain leaders can reduce the reliance on one source. Diversifying suppliers help companies to mitigate disruptions and maintain a consistent material flow.
What is the most resilient supply chain solution?
Such a solution involves diversifying suppliers, adopting technology for real-time monitoring, and maintaining adaptable inventory levels to withstand disruptions and ensure continuity.
Can structural reform restore supply chain resilience?
Yes, structural reform can enhance supply chain resilience by improving redundancy, transparency, and flexibility in operations and logistics.
How do resilient companies absorb shocks in supply chain operations?
Resilient companies absorb shocks through diversification of suppliers, agile response strategies, inventory management, and robust risk assessment and mitigation measures.
Conclusion
To answer the question-”what is supply chain resilience?”,we need to realise how a resilient supply chain enables companies to withstand and recover from disruptions. Global initiatives and strategic approaches play a critical role in building resilient supply chains. By embracing these strategies, with the help of Qodenext, businesses can better prepare for unexpected challenges. They can maintain a robust, adaptable, and efficient supply chain network.
