The world is unpredictable, and if your company’s supply chain is disrupted, your annual revenue could drop by 10%. One minute, everything is fine. The next moment, you’re hit by a wave of delays, shortages, and skyrocketing costs.
But what if you could prepare to confront them before they strike?
Up next, we’ll talk about the importance of supply chain resilience in business and how to make your supply chain more agile, adaptable, and prepared to recover quickly.
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Can your company afford to overlook supply chain resiliency?
Today’s supply chains are under unprecedented threat from trade wars, civil unrest, extreme weather, and volatile market conditions. Resilience is the ability to withstand these risks without jeopardising your company’s growth. Supply chain resilience is essential for survival and long-term profitability in uncertain markets.
So, the short answer is that you must recognise supply chain resilience.
So, how do you create a resilient supply chain for your business? These are the 5 top strategies!
Building supply chains: Top 5 Strategies
The four pillars of a resilient supply chain, supported by clear governance structures, are the significant enablers that include people, processes, and technology.
Here are how businesses can strengthen the following verticals and begin risk-proofing their supply chains:
Take a multi-threaded procurement approach
Do not put all your eggs in one basket. Diversified suppliers of critical components and raw materials minimise risk. So:
- We negotiate multiple contracts with suppliers, local or international. We sign dual-source agreements and long-term contracts with companies that have operations in different locations.
- Avoid over-reliance on low-cost offshore manufacturers, since a minor disruption in world markets can throw your entire supply chain off kilter.
- Invest in onshoring, nearshoring, or friendshoring for your raw material.
- Consider redesigning products to reduce reliance on components sourced from vulnerable sources.
Aim to diversify your shipping network
You have little control over the factors affecting your shipping lanes. Relying on a single route or mode of transportation can be costly in the face of disruptions. To handle this:
- To save money, use multiple modes of transportation. If a port is overcrowded, consider using another port and travelling further inland.
- Plan out alternatives to your main trade routes. It will maintain supply continuity in the event of blockages or congestion.
- Expand into new geographies to absorb massive demand shocks in a single market.
- Use several distribution centres and warehouses.
- Outsource fulfilment to save massive costs associated with in-house operations and to scale up and down as needed by the business.
- Consider crisis-management logistics for businesses.
Improve control over your inventory
Inventory disruptions can severely reduce your profits. While excess is expensive, stockouts can disrupt the entire supply chain. Here are some tips to make your inventory more adaptable:
- Maintain safety stock buffers for critical items to prevent stockouts during disruptions. Determine buffer quantities using historical demand and lead time data.
- Use AI-powered replenishment algorithms to automatically adjust inventory orders and production schedules based on demand fluctuations and supply risks.
- Maintain open communication and data sharing with suppliers to gain visibility into dynamic inventory management and procurement.
- Use rapid response and transportation modes such as air freight to speed up the flow of high-priority components or orders.
- Implement end-to-end inventory tracking technologies to ensure real-time visibility across supply chain facilities.
Optimise your processes to reduce supply chain risk
Proactively identify and address vulnerabilities in your company’s existing supply chain. Here’s how.
Risk assessment: Identify vulnerable areas such as single points of failure, concentration risk, and pinch points. For example, a critical facility or route may be vulnerable to natural disasters or political conflicts, putting inland transportation at risk.
Risk management: Create contingency protocols outlining what steps to take in the event of a specific supply chain disruption scenario.
Risk avoidance: To reduce risks, obtain adequate insurance coverage and prioritise cybersecurity and data privacy within your operations.
Utilise supply chain technology for visibility and agility
Digital capabilities provide the necessary supply chain visibility and analytical power to create resilient, responsive networks. So:
Track and analyse shipment data: Use end-to-end tracking technologies to get real-time visibility into your shipments. API integrations allow you to share data with your customers, suppliers, and logistics partners.
Choose logistics partners who provide control room capabilities to ensure complete supply chain visibility, alerts, and coordinated response in case of an emergency.
Stay current on emerging trends and technologies in your industry, such as blockchain, automation, robotics, and digital twin simulations. Visit the online expert Logistics Insights hub to learn about the industry’s latest research and innovations.
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Planning and preparing for a responsive and resilient future!
By implementing these strategies, you can give your company the flexibility, adaptability, and foresight it needs to overcome obstacles and thrive in the face of uncertainty. Protect your supply chain with streamlined, agile processes and integrated logistics.
