The reaction is not a strategy in the business world. In 2008, we had a recession, in 2011, Tsunami devastated our lives, Ebola rocked the world in 2014, Brexit in 2016, and today, we have COVID-19. All of these events have affected supply chains drastically.
Is it possible for businesses to save their supply chain in such events? When we measure the scale of these events, any attempt to prevent the damage seems frivolous. But if we accept the very fact that such events are inevitable and so be ready with a plan, then we would be able to the least reduce the impact of the damage.
This preparation is known as building resilience. Since a supply chain is a big daddy of any business network, it must be nurtured and protected against any mishappening, small or large. Developing supply chain resilience could help you continue operations and cope up with the disruption better than others.
But the question is where to begin to with? If you are planning to develop supply chain resilience, you must get yourself familiar with the fundamentals. To help you begin with the process, here we have compiled the five fundamentals of supply chain resilience.
1. Redundancy
Where six sigma and lean manufacturing is driving the corporate world, creating redundancy is like swimming against the tide. But then it has its own many benefits of providing safety shock in case of slowdowns or complete delivery failure. Creating a supply chain redundancy requires you to have extra inventory, several suppliers, and many operations staff. It will make your balance sheet heavy initially thought but in disruption, redundancy will enable you to shift reliabilities based on new requirements.
Apart from being costly, there are many other drawbacks of redundancy in the supply chain. It will reduce the overall efficiency and lead to sloppy operations. But the recent chain of events has apparently thrust the requirement for creating redundancy on organizations.
2. Flexibility
While many businesses are reluctant to creating supply chain redundancy, they are more open to the idea of flexibility. A flexible supply chain provides businesses with the ability to change and implement strategies as per the demand during the disruption. There are two key ways you can maintain flexibility throughout the channels.
Standard Processes: Standardizing the process provides an edge in building supply chain resilience. Standard processes across the multiple production floors, interchangeable or interoperable parts and identical processes fulfill the mobility requirements during the disruption. Actually, a similar process means operations employees are familiar with the common structure of how things work in the system. With little training, they can be fixed into other processes thus enabling the company to respond quickly.
Coexistence: Coexistence is relative to flexibility. If you follow a sequential process for cost-effective reasons, then switching to a concurrent process might be strategic and beneficial but is costly.
For example, let us assume that you are building a product, and simultaneously you also build your team of marketing and sales professionals for the same project. The key benefit would be that it will give you a fair idea of how customers respond to your product in real-time so that you can make the necessary changes. So if you are going good and strong in your product development process, then you might consider the team as an added burden but when there is a difference between your idea of the product and the market response, then it is a savior.
In the same way, aligning sales and engineering functions with the supply chain will provide you with the key information that could save you from the disruption.
3. Nurturing Supplier Relationship
How much do you know about your suppliers plays a key role in building resilience against disruption? The knowledge is not limited to their production capability but more importantly their balance sheet and the key people who are making decisions for the business. When you have that kind of relationship with your suppliers, you get to know how they operate and their strength which could protect you in disruption and simultaneously their weaknesses which could disrupt your processes.
4. Cultural Change
Businesses are run by people. And everyone who is employed by the company is the partner in growth or disruption or losses. It is therefore important that the company keep every employee aware of even minute change in the process, be it in strategic goals or day-to-day challenges in the operations. When employees will have their own first-hand experience of change, they will take less time to adapt to the change and in a position to make better decisions in the face of disruption.
5. Empowered Teams
Disruption does not happen overnight. The process of disruption starts long before it takes an enormous form. When your team is empowered, they have visibility to see the elements of the supply chain that may cause disruption. For example, if there are price fluctuations in raw material or quality issues, good visibility into the processes can help you identify red flags in the system.
Is your team empowered to identify those red flags? Field representatives are a key part of your supply chain system. When you empower your field representatives by providing them with the right digital tools and technologies, they can help you collect data that can generate insight, which enables you to find the weak spot in the supply chain.
Final Thoughts
The benefits of building a supply chain resilience are huge. It makes your processes stronger and protects them from upcoming threats. However, it involves a lot of planning, technology, and practical training to build a robust supply chain that could withstand any kind of unforeseen circumstances.
