Steps To Develop A Crisis-Resistant Global Supply Chain

COVID-19 brought home some valuable lessons in how the global supply chain was not impenetrable to the impacts of crises. Everyone involved in the supply chain, including manufacturers, suppliers, distributors, and retailers, faced issues in availability of raw materials for manufacturing and transportation-related capacity constraints to ship the finished goods.

As the market stopped working under the strict impositions of lockdowns and companies were left reeling from the economic aftershocks of the pandemic, stakeholders realized that strategic planning is critical for an agile and crisis-resistant global supply chain.

A good strategy can anticipate and prepare for future disruptions while still maintaining market equilibrium.

Here are some ways for companies to improve on their current operations and build a more resilient supply-chain framework.

Analyze The Operating Model

Often the global supply chain framework itself isn’t to be blamed at all. Companies with ineffective business operating models that are overly focused on market equilibrium are the real culprits when the markets are caught up in a crisis mode.

The use of the latest technology is important in reducing production times while maintaining the same quality. Invest in advanced machines to reduce manufacturing expenditures and simplify the whole supply chain process.

Hire Supply Chain Management Experts

Does your company have a separate supply chain management department? Are they specialists on supply chain-related issues and management? A supply chain expert will know how to tackle issues arising in the supply chain planning approaches, especially those related to logistics, shipment, and deliveries, and address or anticipate problems as they arise.

If you are someone who works in management and want to earn your supply chain management MBA fast, then you should be able to get a hands-on experience on what exactly is it that a supply-chain expert does.

Focus On The Specialty

In times of crisis, usual production levels cannot be continued. When problems arise and supply chain stakeholders are unable to deliver, it’s best to swim in the lane you know best. Know your most in-demand product.

Your priority, in the event of a crisis, is to ensure the delivery of only the product(s) that are high in demand. Secure resources for your core products and ensure their availability in easily accessible inventories.

Also, keep both the raw materials and specialty products in large quantities for adjusting capacities and dealing with changes in business requirements in advance.

Improve Your Digital Plan

If you want to deal with a crisis, digitize all your data. Technology is the only thing that has managed to keep people connected during the pandemic. Considering this, fully-leveraged connectivity and digitization are lifesavers for businesses, especially those in the global supply chain. Companies need to invest in a coherent yet efficient digital plan that must serve two main functions:

Data Automation & Analysis

Data automation refers to the communication between processes based on large and quantifiable data input. You can use AI, Machine Learning, supply chain-specific solutions (you can Find out more here about the advantages of warehouse management and inventory management software, for example), or other latest technologies to organize all necessary manual information.

With automation, you can connect all applications, software, and operations of the business and streamline them. Data analysis is the next step where gathered information can be analyzed to improve operations or offer valuable insights based on the patterns in data collected.

Improvement In Visibility

In a survey conducted by IBM, around 84% of supply chain officers stated that lack of visibility is the biggest challenge in the supply chain. An efficient technology gathers all information, works for better response, offers reliable forecasts, and correctly maps out the current situation.

It provides the supply-chain managers with a complete picture by locating the accurate shipment addresses, schedules of shipments, and other things required for smoother flow of operations. In this way, the supply-chain managers get more thorough, accurate, and reliable information.

Invest In The Buffers

Using capacity buffers is key to developing an agile supply-chain framework. They help in meeting the constantly changing demands, offering managers time to deal with changing plans, and allowing flexibility in the overall supply-chain processes.

The only problem is that capacity buffers are very expensive. However, adequate investment in crucial buffers has long-term advantages and can greatly minimize the extent of disruption caused.

Also, research about the inventory and capacity buffers as it can prove to be valuable information when dealing with challenging situations, like during the launch of new products, controlling the production for unexpected demand, or restoring inventory.

Diversify The Manufacturing Network

As COVID-19 started, China went under full lockdown for several months, and manufacturing operations halted. Production activities of various multinational companies were affected, and a global supply chain crisis developed.

Moreover, as the US-China trade war is becoming serious, many companies are now shifting their manufacturing operations to other regions like LATAM, Africa, and Asia. These developments point to the need of having different manufacturers in more than one location. You should keep backup suppliers, distributors, and retailers in case problems start arising.

A crisis-resilient strategy requires increasing collaboration through communication enhancements. Build inventories in more regions and take the services of suppliers in different areas to expand your supply-chain network.

Audit The Supply Chain

The market keeps fluctuating every second. Consumer behavior rapidly evolves which impacts the supply and demand cycles. Besides, the current market is facing many crises at the moment, any of which has the potential to cause major disruptions.

It is significant, therefore, to upgrade your supply chain strategies to deal with any major disruptions, while also regularly identifying gaps and issues that might be costing you without your knowledge. It is important in this case to work with a companies and suppliers specialising in your industry. For example, if you are in the military or aviation industries and require a supply of niche military aircraft parts, the procurement solutions operated by Greenwood Aerospace might be a valuable solution for your business.

To deal with these, audits of the supply-chain framework are a must. It will help in identifying any weak links in the supply chain, avoid any redundancies in processes, help you keep track of supply records, and assess the performance of the various stakeholders involved.

Audits will also come up with risk analysis, so that you can mitigate losses from unexpected disruptions or put solutions in place well before any of the processes are affected.

Final Thoughts

The market is always susceptible to sudden and uncertain crises. To effectively deal with these, the best way is to develop and put in place effective contingency plans. If your company has a resilient business operating model, then supply-chain constraints will do little damage to the actual operations of the business, and any major or minor disruptions can be anticipated well in advance of the disrupting events.