After years of watching global supply chains get rattled by one crisis after another, business leaders have learned an important lesson: it‘s time to build more resilience.
As a supply chain data analytics consultant with over a decade of experience, I‘ve seen firsthand how disruptions expose weaknesses in complex, interconnected supply networks. The good news is that with the right strategies and technologies, substantial improvements can be made.
In this comprehensive guide, we‘ll explore the top 4 ways supply chain leaders can start strengthening resilience right now to overcome current and future challenges.
1. Enhance Visibility Through Tighter Data Integration
Limited visibility into upstream and downstream operations is a huge barrier to resilience. Many supply chain partners still rely on manual processes like spreadsheets, email, and phone calls to share information. This results in fragmented, delayed insights.
For example, during the pandemic, I consulted with a major automotive manufacturer that had very little visibility into their tier 2 and 3 suppliers. As COVID cases spiked at a few small but critical vendors, ripple effects led to parts shortages that shut down production lines.
To enable rapid adaptation, supply chains need end-to-end transparency. This requires seamless, real-time data sharing across the extended network.
Strengthen Supplier Relationships
Open, collaborative relationships with suppliers are crucial. Treat them as true partners, not vendors. Foster an environment of trust that encourages transparency from their end.
For instance, one of my clients shifted to longer-term contracts with tier 1 suppliers. This provided the certainty needed for suppliers to share inventory data that was previously guarded.
Leverage Integrated Platforms
Modern supply chain management platforms like UCBOS and project44 centralize cross-functional data onto a single version of truth. This delivers real-time visibility spanning suppliers, manufacturing, inventory, logistics, and sales.
Cloud-based architecture enables easy integration with existing ERP, MES, and other enterprise systems to break down data silos. For example, one client achieved 40% increased supply chain visibility within months by implementing project44‘s logistics platform across their partner network.
Implement IoT and Sensors
Internet of Things (IoT) devices like sensors provide granular visibility into equipment performance, product locations, and environmental conditions. Supply chains can tap into thousands of real-time data points for dynamic monitoring and rapid anomaly detection.
Continuously Map the Network
Map out tier-1, tier-2, and beyond suppliers and logistics partners. Identify critical nodes and potential single points of failure. Maintain a living model of the supply network that can be analyzed and optimized based on emerging conditions.
For instance, a medical equipment company I advised developed a digital twin of their supply chain spanning over 35,000 nodes. This enabled rapid network adjustments as COVID disrupted demand patterns.
2. Incorporate Strategic Redundancies and Flexibility
When supply networks rely on single geographic regions or suppliers per component, it only takes one disruption to cascade through the entire chain. Building in redundancies and flexibility is key.
Diversify and Localize Suppliers
Maintain qualified alternate suppliers for all critical components, not just tier 1. Make sure backup suppliers are geographically distributed to mitigate regional disruptions. Nearshoring and localizing also improves responsiveness.
For example, a retail client recently opened additional supplier contracts in Vietnam, Thailand, and Mexico to reduce reliance on just China and a few mega-factories.
Regionalize Production and Distribution
Avoid concentrating manufacturing and distribution facilities in just one or two central locations. Localized, agile plants and warehouses improve responsiveness to demand fluctuations.
Develop Scenario Strategies
Create contingency plans outlining how your supply chain will respond under various disruption scenarios. Simulate scenarios like port closures, cyber attacks, demand swings, and more. Identify mitigating actions for each, such as alternative transport routes.
Optimize Inventory Buffers
Carrying excess inventory can be expensive, but lean models leave no room for disruption absorption. The optimal level balances cost efficiency with strategic buffer placement across the network.
For example, a global CPG company optimized their finished goods inventory to handle a 2 week disruption for high volume SKUs by combining predictive analytics with risk scoring.
3. Capitalize on Emerging Technologies
Advanced technologies like artificial intelligence, blockchain, robotics, drones, and control towers are poised to transform supply chain resilience.
AI and Machine Learning
AI algorithms can rapidly analyze upstream and downstream data to predict disruptions before they occur and prescribe mitigation actions. This enables proactive resilience.
I helped a large grocery chain implement an AI system that analyzes weather forecasts, social media trends, and warehouse cameras to anticipate demand surges and shortages caused by events like storms. This will enable agile, preemptive adjustments.
Blockchain for Enhanced Transparency
Blockchain establishes a decentralized, shared ledger visible across the supply chain. This cryptographically verified data pipeline enables new levels of supply chain transparency, security, and trust.
Control Towers for Real-Time Management
Control towers integrate and analyze data from IoT devices, TMS, WMS, ERP and other systems to deliver control center-style visibility. This empowers agile, data-driven decision making.
Robotics and Autonomous Vehicles
Robots and self-driving vehicles unlock 24/7 optimized picking, packing, and delivery. This improves speed, accuracy, and labor resilience at all points along the chain.
Simulation and Digital Twins
A digital twin is an ultra-realistic virtual model of the end-to-end supply chain. Simulate disruptions on the digital twin to identify vulnerabilities and test mitigation strategies.
For example, GE Appliances reduced unplanned downtime by 35% using simulations and digital twin analysis to predict machine failures before they occur.
4. Continuously Evaluate and Enhance Strategies
Building resilience requires ongoing evaluation and evolution of strategies as conditions and risks change.
Monitor Metrics
Establish supply chain resilience KPIs based on stability, adaptability, recovery, and efficiency. Track them to quantify improvements over time.
Perform Stress Tests
Conduct simulations of increasingly severe supply chain disruptions based on real-world scenarios. Identify the breaking point. Then develop strategies to push that point of failure further out.
Review Risk Profiles
Continuously evaluate risk profiles associated with suppliers, facilities, logistics lanes, and inventory. Adjust mitigation strategies accordingly.
Maintain Agility
While resilience focuses on surviving disruptions, agility concentrates on flexibility to meet shifts in customer demand. Develop processes to swiftly adjust supply chain operations in response to new requirements.
For instance, leading companies use modular designs and postponed differentiation to rapidly reconfigure production and distribution in alignment with market needs.
Key Takeaways on Improving Supply Chain Resilience
Here are some of the major recommendations based on my experience as a supply chain data analytics consultant:
- Break down data silos through integration, blockchain, IoT and other technologies
- Incorporate redundancies across suppliers, facilities, transportation, inventory
- Leverage AI and machine learning for predictive, prescriptive analytics
- Simulate disruptions and stress test strategies continuously
- Develop flexible, agile processes and operations
By taking a proactive approach and following these tips, companies can thrive through virtually any supply chain disruption imaginable. Reach out if you need any help getting started on your resilience transformation journey! With over a decade of hands-on experience, I‘m ready to consult.
