Defined as the capacity to recover quickly from difficulties, resiliency is being discussed a lot right now as more companies put extra effort into shoring up their supply chains and ensuring that those networks remain viable. Achieving this goal will be particularly important in the post-COVID world, when companies try to avoid repeating mistakes while at the same time establishing stronger, more resilient supply chains.
According to Accenture, 94% of Fortune 1000 companies are experiencing supply chain disruptions due to the pandemic. “The COVID-19 pandemic has lifted the veil off supply chains and shown that they aren’t soulless assembly lines of automatons that move things from here to there,” Jenny Ahlen writes in Forbes. “They’re complex, connected, and powered by people, and for every product shortage or plant closure caused by disruption to the supply chain, there are hundreds or thousands of workers whose livelihoods – and often their health – are at immediate risk. Plus, trillions lost in global revenue.”
Not Business as Usual
Acknowledging that pandemics aren’t the only risk to the world’s supply chains, Ahlen says multiple external factors can disrupt business-as-usual. Climate change, higher temperatures, increased drought, more frequent natural disasters, rising seas, and shifting crop yields have all been impacting businesses across the globe.
These and other outside forces are pushing companies to reevaluate and rethink the resilience of their supply chains. “Supply chain visibility is key, because without it,” she writes, “companies can’t anticipate future disruptions and plan accordingly.” Along with focusing on higher levels of supply chain visibility, companies can also improve resiliency by:
- Leveraging analytics, metrics, and reporting tools. Analytics can help organizations 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,” TechTarget points out, “something many leaders understood but did not carry out pre-pandemic.” Here at DB Schenker, we use a combination of analytics and reporting that enable high levels of visibility for our customers. “This, in turn, helps them make more informed decisions regarding their shipments,” said Daniel Bergman, CCO of DB Schenker Americas, “serve their customers better, and gain overall higher levels of supply chain resilience.”
- Shifting sourcing strategies. New approaches to sourcing are critical to building post-pandemic supply chain resilience. Pre-pandemic, for example, the pressure to reduce costs induced many providers to rely heavily on just-in-time supply chains and keep fewer reserves. That’s since 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,” TechTarget states. “This involves creating strategic reserves and promoting local pooling to pivot towards maintaining safety stocks of key supplies.”
- Getting everyone working from the same playbook. According to Supply & Demand Chain Executive, connecting supply chain partners and digitizing information to generate a single version of the truth helps ensure a coordinated supply chain response. “The need for connectivity across all supply chain partners is so they can share data across the network and leverage embedded collaboration tools to improve decision making,” SDC “Effective collaboration with partners is critical to supply chain resiliency.”
- Automating repetitive tasks. Automation has been making its way into the world’s plants, warehouses, and distribution centers for the last few years. The global pandemic and the new socially-distanced workplace requirements could accelerate that trend. Robotic process automation (RPA), for example, can automate tasks and enable greater responsiveness, which in turn boosts supply chain resilience. “RPA software can work through the high volume of cancellations and increase response time,” TechTarget notes, “which frees up human workers to deal with other critical tasks.”
- Learning from past mistakes. The most resilient enterprises view every challenge as an opportunity to learn. They investigate every mistake, from quality mishaps to missed deliveries, to identify and eliminate core causes. “These companies also anticipate potential errors and craft recovery plans well in advance,” SDC points out. “This discipline ensures that when an unpredictable disruption occurs, the company is prepared to employ a contingency plan, early, and ease the potential impact.”
Difficult, But Worth it
Supply chain management is intricate work, even during the best of times. Add a global pandemic and a recession to the mix and the complexities become even more difficult to overcome. “However, through discipline, hard work, and robust planning, businesses can overcome this time of great uncertainty,” SDC advises, “and set themselves up to be flexible and resilient to any disruptions the market might present.”