A company’s supply chain is its lifeline, and in recent months, the aftermath of the Covid-19 pandemic and current inflation has put immense pressure on supply chains around the world. Businesses have been scrambling to source essential goods and materials, and many have been forced to shut down or scale back operations due to disruptions.
This has highlighted the need for supply chain resilience – the ability of a supply chain to withstand shocks and continue operating despite disruptions. In the face of an uncertain future, companies are looking for ways to make their supply chains more resilient so that they can weather any future economic downturns.
There are several ways to build resilience within the supply chain. One of the most important is to diversify. When companies diversify, it provides them with more than just a solitary source. If a particular distributor or service provider is unable to meet demand, other options are available to assure a steady flow of production. By diversifying, companies can reduce the risk of disruptions caused by machine failure, service issues, weather, and other unexpected catalysts. In addition, it can help to improve quality and reduce costs. The old saying, “you get what you pay for,” does not always apply in logistics! Other companies may have access to resources that allows them to get the job done efficiently and at a better price. Diversifying helps to take advantage of that.
Another preeminent way to strengthen resilience is to build up inventory levels to create a buffer in case of disruptions. This can help to meet customer demand when there is no inbound activity due to disruptions. With inventory on hand, a company can continue to serve their customers and wait out the storm of disruption until they can restock product.
No matter how important it is to diversify and increase inventory, a focus on technology must be implemented to become more resilient. With the proper understanding and use of software and data systems, companies can create a more agile and responsive supply chain that can quickly adapt to changes on demand and, in some cases, prepare them for upcoming changes. Using specific systems and understanding how to apply the data to your supply chain will take the delay out of decision making and promote proactive strategies so that you are always prepared with a solution.
The current economic rollercoaster has highlighted the need for stronger resilience and has hopefully encouraged companies to diversify, build inventory, and make better use of the technology that is available to the industry so that they can withstand any future strains on the supply chain.