Expert Column Resilience in Supply Chains

Supply chains today face unprecedented disruptions - from natural disasters to geopolitical events, and now a global pandemic. These disruptions can severely impact business operations and continuity. Building resilience has therefore become imperative for supply chains to withstand disruptions and ensure long term success. This article discusses strategies and best practices for building resilience in supply chains.

Assessing and Addressing Risks

The first step towards building resilience is assessing potential risks across the supply chain and having mitigation plans in place. Some key risks that need assessment are:

Natural Disasters

Natural disasters like floods, earthquakes, storms can disrupt supplies and logistics. For instance, the 2011 Tōhoku earthquake in Japan disrupted automotive and electronics supply chains worldwide. Mitigation strategies include having multi-sourced critical components, alternate transportation routes, digitized inventory and production systems that enable rerouting supplies.

Geopolitical Events

Trade wars, sanctions, and government actions can impact supplies. The US-China trade war increased costs for many companies. Mitigation strategies include localization, nearshoring, and diversifying supplier bases across regions.

Pandemics

As evidenced by COVID-19, pandemics can severely restrict mobility and operations. Mitigation strategies include digitization, automation, omnichannel distribution, and contingency workforce planning.

Cyber attacks

Increased digitalization also increases vulnerabilities to cyber attacks. A 2021 ransomware attack on Colonial Pipeline disrupted fuel supplies in the eastern US. Mitigation strategies include cyber security investments, data backups, and manual workarounds.

Supplier Disruptions

Supply disruptions at critical tier-1 or tier-2 suppliers can halt production. The 2011 Thailand floods impacted supplies from electronics manufacturers. Mitigation strategies include inventory buffers, dual sourcing critical supplies and financial assistance to suppliers.

Building in Flexibility

Flexibility and agility are key enablers of resilience. Some ways to build flexibility are:

Digitization

Digital systems provide end-to-end supply chain visibility and enable dynamic rerouting of supplies. Digital tools like predictive analytics and simulations also help assess and address risks proactively.

Modularized Production

Breaking down production into modules makes it easier to shift production across locations in case of disruptions. It also enables scaling capacity up or down faster.

Multi-Sourcing

Diversifying suppliers geographically reduces over-reliance on any one supplier or region. It also provides alternate sourcing options during localized disruptions.

Flexible Transportation

Using multiple transportation modes, carriers and routes provides alternatives to sustain logistics during disruptions. Contracts could include volume or mode flexibility.

Postponement

Delaying final configuration of products helps address uncertainties in demand. This lean principle reduces risk of obsolescence or shortage of finished goods.

Collaboration and Visibility

As supply chains become more complex, end-to-end visibility and collaboration are critical for managing risks. Some best practices are:

Information Sharing

Partners openly sharing forecasts, production plans, inventory levels, and other operational data enables better coordination.

Control Towers

Centralized data hubs with supply chain analytics provide enhanced visibility. Control towers help identify and resolve bottlenecks.

Integrated Technology

Common platforms across the supply chain enable seamless data sharing. Integrated IT systems also facilitate coordination and swift decision making.

Joint Risk Management

Partners collectively identifying and mitigating risks leads to better preparedness. Collaboration also enables faster recovery during disruptions.

Aligning Incentives

Incentives, penalties and risk-sharing agreements help align partners towards resilience. For instance, backup supplier contracts that share the fixed costs.

Organizational Agility

While processes and technologies provide agility, organizational culture and leadership also determine resilience. Some best practices are:

Cross-Training Employees

Employees trained in multiple skills provides workforce flexibility. It enables redeployment to mitigate shortages during disruptions.

Empowered Teams

Frontline teams empowered to take quick decisions enables faster incident response. It avoids delays of going through bureaucratic processes.

Leadership Commitment

Senior leadership commitment to resilience through policies, investments and culture fosters organization-wide focus. It ensures resilience gets due priority.

Learning Culture

Analyzing past disruptions and learning from them is vital for better preparedness. Companies must continually assess and refine responses.

Scenario Planning

‘War-gaming’ different risk scenarios builds experience in managing crises. It prepares organizations to respond effectively during actual disruptions.

Conclusion

Building supply chain resilience requires a holistic approach across strategy, operations, technology, and leadership. While processes and tools provide agility, mindset and culture determine true resilience. Companies that continually assess risks, build in flexibility, enhance collaboration, and nurture a learning culture will be well-positioned to handle disruptions and thrive in the long term. Resilience enables companies to withstand adversities and maintain continuity of operations, thus providing lasting competitive advantage.

About Cello Square

Cello Square is a digital freight forwarding service, developed by Samsung SDS. The platform provides end-to-end visibility and optimal routing of logistics transport with a simple booking process. Features range from real-time quotations, chat functions to dashboards reflecting operation insights. Cello Square is used by leading companies from various industries to optimize supply chain stages and enhance system capability. 

Samsung SDS is a provider of Digital Logistic Services, establishing strong logistical capabilities across the world. Our global network spans across 36 countries with 53 international branches. We provide comprehensive IT-enabled services optimized to respective areas of Global Logistics, reliably handling the world’s 10th largest volume of air and ocean cargo. Speak with us today to optimize your supply chain operations.

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