7 supply chain resilience strategies to use now
Weather events, geopolitical unrest and other disruptions are occurring more frequently. These seven supply chain resilience techniques can help manage them.
In a world where complexity and disruption are the norm, building resilience into the supply chain is critical because it can help maintain the flow of goods between suppliers and consumers.
Techniques that help make a supply chain more resilient include mapping out the supply chain, developing alternate sourcing and routes, establishing real-time tracking, centralizing information from supply chain partners, using forecasting and modeling, and following good inventory management practices. Technology like ERP software can simplify some of the processes associated with these strategies, such as supplier communication.
Learn more about the top seven supply chain resilience strategies that can help companies improve their international logistics operations.
1. Map the supply chain
Mapping out key supply chain partners, routes and other factors is a good first step toward resilience. It enables supply chain leaders to better understand how their company's goods flow from suppliers to consumers.
Mapping also helps to uncover vulnerabilities and bottlenecks.
A supply chain map reveals single points of dependency in terms of a company's suppliers. For example, if a company sells beach equipment and it only works with one fabric supplier for its beach umbrellas, that part of the supply chain is a high point for risk because no backup plan exists.
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The supply chain map can also highlight whether a company is reliant on a single route for its supply chain. For example, if a company's fabric supplier only uses one route to ship fabric to company warehouses, that part of the supply chain is vulnerable for disruption because the supplier doesn't have a backup route.
2. Source alternate suppliers
Supplier relationship challenges are an unavoidable reality, but being proactive boosts resilience. A supply chain map identifies current suppliers. Leaders can use that to create options and alternatives so they don't become overly dependent on a single supplier.
The following strategies can help when choosing alternative suppliers:
- Try to find a supplier that has multiple locations and can shift operations between its locations if needed. The supplier having this ability can prevent the company's supply chain operations from negative effects if, for example, one of the supplier's manufacturing locations is affected by a weather event.
- Seek out nearshore outsourcing opportunities by working with suppliers that are less likely to be affected by international issues. Doing so will reduce the likelihood of an overseas war or other international crisis affecting a supply chain.
- Add disaster recovery and readiness requirements to service-level agreements with suppliers. For example, a company can require that its supplier follow certain record retaining procedures so the supplier's information won't be wiped out in the event of a natural disaster, delaying the company's supply chain operations.
3. Create alternative routes and add emergency logistics partners
As with alternate suppliers, backup carriers and routes can help make a supply chain more resilient. International networks are easily disrupted by black swan events such as piracy, bridge collapses, blocked routes and pandemics, so having contingencies in place is vital for a healthy supply chain.
Following these strategies may be helpful when selecting alternative carriers and routes:
- Work with carriers that already use multiple routes and can easily shift between them if required. For example, supply chain leaders should confirm that a carrier possesses the correct vessels for changing shipping lanes if needed.
- Reserve and book capacity with carriers well in advance so space is guaranteed for a company's products.
- Add business continuity, disaster recovery and readiness requirements to service-level agreements with carriers.
4. Set up real-time tracking to help identify delays
Receiving warning well ahead of time about potential issues can help supply chain managers act quickly and prevent or mitigate supply chain disruptions.
Real-time tracking helps keep supply chain managers informed about any potential problems. IoT devices continually report products' and shipments' locations, letting tracking software flag any delays. For example, an IoT device could alert a supply chain manager that a shipment is delayed by weather and will arrive three days later than scheduled.
Supply chain leaders can also analyze if difficulties are one-off problems or more persistent issues. For example, if shipments in a certain area are consistently delayed because of storms, the supply chain manager can work with the carrier to establish potential alternate routes.
5. Centralize information across supply chain partners
Data can help build supply chain resilience in other ways as well.
An ERP system or a specialized supply chain management platform helps centralize multiple logistics partners' supply chain information. Supply chain managers can use their software to communicate more easily with suppliers and carriers, and everyone involved in the supply chain can use the software to access the same data.
These capabilities can prevent issues such as a supplier working off an old Excel sheet of delivery dates without realizing that the information is out of date, which would result in delays for every other partner in the supply chain. ERP software and supply chain management platforms enable all users to access the most up-to-date data.
6. Use forecasting and modeling to understand demand and lead times
Technology that can help predict future problems also enables supply chain resilience.
Forecasting and modeling software can predict future product demand by referencing data such as historic trends, new product launches and marketing promotions. For example, forecasting software can predict that a home supply store will sell more snow shovels during the winter, based on previous sales trends.
The software can also model how different disruptions will play out and suggest ways to deal with the disruptions. For example, a supply chain leader may see that a blizzard is due to hit a warehouse's location. The supply chain leader can use modeling software to view the effects on the company's supply chain if the warehouse is unable to ship any products for one week, for example. Modeling software can then suggest alternate routes for shipping to potentially mitigate these effects.
7. Practice good inventory management
Proper inventory management helps enable supply chain resilience as well. For example, neglecting inventory management could lead to warehouse workers failing to order the proper amount of screws for their assembly line to build cameras to sell to customers, leading to a lack of available products for customers and disrupting the supply chain as a whole.
Supply chain leaders should ensure workers are following these inventory management practices:
- Ensure proper lead times between order, supply, transport and distribution.
- Understand future product demand and its consequences for stock levels.
- Track inventory levels and order new stock when needed.
- Maintain contingency stock to have on hand during disruptions.
Paul Maplesden creates comprehensive guides on business, finance and technology topics, with expertise in supply chain and SaaS platforms.
