7 techniques to build supply chain resilience
In the wake of the COVID-19 pandemic, business and supply chain leaders have realized how important supply chain resiliency is. Here are seven ways to boost it.
The COVID-19 pandemic has disrupted virtually all areas of the supply chain and underscored why resilience is so critical.
"Adversity like COVID-19 reveals cracks in your supply chain that were there long before the virus hit," said Alan Amling, a lecturer and researcher with the Global Supply Chain Institute (GSCI) in the Haslam College of Business at the University of Tennessee.
Here are seven techniques supply chain leaders can consider to build supply chain resilience and become more agile overall.
1. Build analytics capabilities
Analytics can help leaders identify risks and demand fluctuations and respond to them appropriately. In other words, it can be an important tool in a company's supply chain resilience arsenal -- something many leaders understood but did not carry out pre-pandemic.
Case in point: Although 76% of technology decision-makers and influencers believed that analytics was critical to their supply chains, far fewer -- 56% -- had invested up to $5 million in developing their analytics toolkits, according to a 2019 Deloitte survey.
Getting the most from analytics requires the right infrastructure -- and the right people.
"People with leading-edge digital and analytics skills are in short supply and generally can be very costly to hire," said Sam Pearson, principal at Deloitte Consulting.
To remedy this, many companies will take steps to build a more technically and analytically savvy supply chain workforce, Pearson said. Part of this involves exposing the team to a wide range of experiences, which might include the chance to work in different areas of the supply chain, across different geographies or with different technology platforms. And supply chain employees can also gain insight by spending time with customers, he said.
Analytics requires attention is to work optimally, and that's important to understand.
"AI needs to be monitored, given feedback and, sometimes, be redirected, just like a human employee," Pearson said.
2. Consider contactless delivery options
In an effort to boost supply chain resilience, many leaders are receptive to processes and technologies that they may have been reluctant to consider pre-COVID-19. Contactless alternatives fall into that category.
"Compounding [the supply chain disruption], a fair number of recipients do not want to interact with the delivery person, and they are concerned about contracting the virus from packages," said Alex Sharpe, principal at Sharpe Management Consulting.
These concerns are pushing enterprises to accelerate contactless delivery initiatives as part of their COVID-19 pivots, Sharpe said.
Prior to COVID-19, companies were reluctant to adopt contactless delivery because of pushback from customers and managers, but that pushback has evaporated.
"History shows us disruptions like this foster adoption [of new technologies and processes]," Sharpe said.
Amazon has used drones and app-enabled drop boxes for years. Other companies are exploring this contactless delivery technology in an effort to keep their workers safe. Companies are also experimenting with virus-resistant packaging.
3. Rethink supplier strategy
New approaches to sourcing are critical to building post-pandemic supply chain resilience.
Pre-pandemic, the pressure to reduce costs induced many providers to rely heavily on just-in-time supply chains and keep fewer reserves, Sharpe said.
That has changed.
In the short run, companies will likely focus on creating safety stocks of key supplies as the world wakes up to the fragility of global supply chains, he said. This involves creating strategic reserves and promoting local pooling to pivot towards maintaining safety stocks of key supplies. In the long run, many companies should pursue a multi-supplier strategy, especially for key items.
The local aspect of that lesson is important.
Industry watchers have long focused on big-ticket items, due to their intricate supply chains. But as COVID-19 disrupted the supply of low-margin items such as hand sanitizer, many leaders have realized these supply chains are critical too.
As the scarcity of smaller items becomes more prevalent, more of their manufacturing will move back to the U.S., Sharpe said.
4. Focus on rapid response
Within the span of a few weeks, companies have lost key suppliers and experienced massive shifts in product demand. They've had to change their method for transporting products and find new ways to manage and protect their workforce. While few could have predicted COVID-19's tremendous impact, it's clear now that companies need to have a backup plan for the worst-case scenario.
Organizations will establish rapid response supply chains that prioritize transparency, anticipate new disruptions and enable faster decision-making in the wake of COVID-19, said Mark George, practice leader for supply chain, operations and sustainability at Accenture Strategy.
In the short term, this will enable supply chains to help society manage the humanitarian side of an emergency, George said.
For some businesses, this is an opportunity to repurpose their manufacturing capabilities to produce items like ventilators, masks, sanitizer and other critical products. For example, liquor distilleries across the U.S. have repurposed their equipment to produce hand sanitizer.
Businesses that have done well during the crisis will be in a better position to transform their supply chain, George said. This will increase both their supply chain resilience and responsiveness after the crisis has passed.
5. Use digital twins
Many manufacturers use digital twins to map out a product's lifecycle. Organizations are now using digital twins to test different "what-if" scenarios as part of their attempts at boosting supply chain resilience post-COVID-19.
"These digital twins can identify actions to alleviate or resolve disruption, uncover unidentified dependencies or constraints and help forecast the cost, time and effort required more accurately," George said.
Companies can augment a digital twin with analytics-based risk frameworks. These frameworks evaluate the time it takes for a disrupted supply chain node -- such as a supplier facility, a distribution center or a transportation hub -- to be restored to full functionality. These digital twins can also represent a company's entire supply network at any level of detail and uncover risks that were previously hidden.
6. Invest in 3D printing
Additive manufacturing -- or 3D printing -- has served an important role in handling COVID-19's effects.
"The flexibility offered by 3D printing is also coming into focus during this pandemic," Amling said. "The same 3D printer can be producing personal protective equipment one moment and patient sampling swabs the next."
Take the example of Chicago-based manufacturer Fast Radius. Prior to the COVID-19 pandemic, Fast Radius produced parts for motorcycles, robots and prosthetics. Now, the company is working to produce face shields, ventilator parts and reusable face masks.
7. Automate repetitive tasks
Robotic process automation (RPA) can automate tasks and enable greater responsiveness, which in turn boosts supply chain resilience.
Ascension Healthcare, an Indianapolis-based pharmaceutical company, has experienced an increase in cancellations from suppliers in recent weeks, according to a company press release. Its leaders responded by working with Agilify Automation, an IT consultancy, to develop RPA capabilities that enabled Ascension to tackle new demands.
RPA software can work through the high volume of cancellations and increase response time, which frees up human workers to deal with other critical tasks.