It is a world filled with uncertainties at every turn where one should be expecting the worse. In such increasingly dynamic and turbulent times, numerous events can endanger the daily operations of any business. Supply chain plays a key role globally and we recognize it as a source of strategic advantage.
It is a time when every country tries to invest in supply chain architecture and technology that reaches global markets. But the inherent threat is as the supply chain becomes globalized it is also exposed to vulnerabilities that can disrupt its operations.
Many of these events can be natural as well as man-made disasters such as political instability, terrorist attacks, fires labor disputes and the most recent being the outbreak of the coronavirus. All of these highlight the need for shippers to create a more resilient full proof supply chain architecture that can shield a business from financial damages and operational impacts.
WHAT IS A RESILIENT SUPPLY CHAIN?
If we are to understand the concept of resilient then it would be worthwhile to know that it traces its roots back to the work of an ecologist C. S. Holling in 1073 who referred to the characteristics of resilient ecological systems. Ever since then we have been applying the concept to various fields of psychology, disaster management and today in supply chain management.
If one needs to define supply chain resilience then simply put “a supply chain resilience is the ability of a supply chain to both resist disruptions and quickly recover operational capability after the disruption”.
Hence resilience is the capability developed to react to the disruptions that occur. Though many are of this view some will contest in saying that supply chain resilience is more of a proactive effort to help businesses prepare for possible disruption.
So resilience consists of two most important components which are the capability of a supply chain to resist and then to recover. Let us elaborate on these to specifics.
RESISTANCE: This is the capability of a system to be able to minimize the impacts of disruption either by countering it with a measure to completely avoiding it or minimizing the time between disruption and recovery.
RECOVERY: The capability of a system to completely recover to a fully functional system after a disruption occurs. It will have to go through a stabilization phase, a steady-state and a fully functional state of operations.
CHANGE IN RESILIENCE REQUIREMENTS:
One should also note that in the past logistics companies were more focused on a ‘shield and protect’ method as they were more engaged in protecting their supply chain. That has considerably changed in the recent scenario as a more dynamic threat has evolved. A threat that has erupted due to the connected ways of conducting operations that are spread across territorial boundaries.
With the advent and use of technology that has become the backbone of the supply chain. Interconnected and constant exchange of data has pushed us to a new era of efficiency, speed, and proactiveness but it also has invited a new potential risk.
Technology has given rise to a global threat of hacking and intrusion attacks that can not only disrupt your supply chain operations but also pose a threat to your connected network as well.
In such scenarios, it is imperative to say that businesses should focus more on engineering supply chains that can quickly bounce back from such unforeseen disruptions.
6 STEPS IN BUILDING A RESILIENT SUPPLY CHAIN
Identify risks: This is the most important aspect of creating a good proactive resilient supply chain. One should be able to identify the risks each supplier brings in. We need to access the possible risks, its significance, and its likelihood. Only the can you plan strategic methods to avoid or tackle it during its occurrences.
A long term view: Your strategy to tackle disruptions should be of a long term view. Avoid building just in time reactive methods as this will increase the risk of business disruption. Instead, converse with your suppliers about the risks involved during their bid submissions.
Talk to your suppliers: Transparency in business rewards you manifold and the same goes for this industry as well. Encourage committed and open dialogues with your supppliers as this will build trust and increase confidence in the relationship.
Proper analysis is the key: Analysis is a part and parcel in any business as this can deliver the utmost returns when creating a resilient supply chain.
Evolve through experience: Risks are inevitable but a winner is one who responds proactively to the hitches involved in your supply chain. Reactive capabilities can be developed only by implementing the best solutions learned from experiences.
Partnering with a 3PL: Strategic partnership with 3PL will deliver a lot of benefits for the smooth transit of shipments even during adversities. This is because 3PL can act as a single point of contact which connects shippers to the network of solution providers.
FINAL THOUGHTS: Many discussions have started on the kind of supply chain resilience businesses have to adapt to particularly after the Coronavirus outbreak. In short, it all comes down to two core interrelated elements as resistance and recovery. As per our view, every shipper or logistics company have to invest their time, money and resource to develop resilient supply chain processes that help them tackle a plethora of disruptions that can occur, some that can be anticipated and some that are completely unforeseen.
