3 MIN. READ
Supply chain resilience depends upon constant monitoring of situations that can affect raw materials, transportation and production schedules.
Rapid response to these conditions can mean the difference between surviving a global crisis and shutting down operations.
COVID-19 affected every supply chain on the planet. Companies that relied on overseas suppliers for materials and components quickly learned that the lack of a backup plan was no plan at all. Simply put, when a global crisis strikes, there is not enough time to figure out what to do. Measures must be ready to go at a moment's notice.
For a graphic example of how quickly the bottom fell out, large container ships that (just a month or two prior) had been leaving Chinese ports at normal capacity had dropped to 10% capacity by March 2020. The implications for businesses are quite clear: Two months to source, validate and activate a new supply chain is nearly impossible for even the largest companies in the world.
Needless to say, the companies that were able to engage their alternative plans were the ones who came out relatively intact. This then begs the question: What are some of the things you can do to improve your supply chain resilience in the event of a disruption?
Carry Inventory
Until the COVID-19 pandemic, modern economics discouraged carrying inventory as a way to save costs. The mere act of warehousing products and parts that were not immediately required was seen as a waste of space and money. It was better to use just-in-time manufacturing methods so that the minimum (preferably none) amount of inventory was held.
Many are now seeing that it is actually very smart to stockpile either the materials needed to make your products or the finished products themselves. In the event that your supply chain becomes disrupted, this buffer will prevent you and your customers from feeling the full effects.
Diversify Suppliers
Relying on a single supplier is a risky method of doing business. Any issue that negatively affects that supplier will leave you without any means of getting the parts or materials you need. Practicing omnichannel distribution protects you by having multiple suppliers in different geographic regions.
This avoids the chokehold that may arise from regional disruptions or from the effects of any single company failing to provide in a timely manner. An additional benefit of this practice is obtaining better pricing on your materials by having leverage in rate negotiations.
Adapt and Overcome
Evaluate the components of your supply chain that are most at risk and ask yourself whether there are workarounds for their absence. Even in global events like a pandemic, it is rare that all parts of your supply chain will be affected in the same way.
For example, during the early days of COVID-19, raw materials from overseas were delayed in reaching customers in the United States. Sourcing locally would have been a way of getting around this problem since domestic truck delivery capacity was more than capable of moving freight, despite the drop in demand. However, as mentioned before, the time for establishing and validating workaround procedures and contacts is before a crisis strikes.
Make Sure All Parties are Informed
Communication with both customers and suppliers keeps everyone in the loop. When situations are abnormal and changing rapidly, receiving and giving firsthand information is invaluable.
Suppliers will be able to update you on their latest capability status, which in turn allows you to make timely decisions. Customers will appreciate your honesty and willingness to look for alternate solutions.
Tools to Keep Your Company Resilient in Uncertain Times
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