Supply chain disruptions have always existed, but the ever-changing business landscape of today has made resilience critical for business viability and market share. The pandemic created significant challenges, and using outdated strategies meant some organizations floundered -- and they are floundering now, if they even still exist.
It’s imperative to boost supply chain resilience. Integrating modern technological solutions provides a supply chain transparency and streamlines processes while supporting strategies that build a supply chain that withstands any current and future disruptions. Agility and flexibility are required, of course, but that’s not the whole story.
In this article, we’ll explore the various dimensions of supply chain resilience, discuss strategies, the importance of streamlined processes, and the crucial role of collaboration. We’ll also touch on best practices, provide an example of resilience in action, and the future of the resilient supply chain.
What is supply chain resilience?
A resilient supply chain can mitigate most disruptions and minimize those that do occur. A lack of supply chain resiliency has a wide-ranging effect, not only on supply chain sections, but on the overall business, threatening the health of the organization itself.
Supply chain disruptions take several forms. Pandemics, natural disasters, and geopolitical tensions spring readily to mind, but other threats lurk in the form of unanticipated market trends, new competitive forces, and changes in customer buying behavior. The rigid “resist and recover” model must expand to include modern supply chain technologies and processes that allow supply chain leaders to accurately forecast, anticipate, and respond speedily to both risk and opportunity.
Technology streamlines processes for optimization with flexibility
Opaque supply chains are over. Today’s supply chain management platforms offer complete transparency, and copious data for decision making to enable organizations to anticipate potential issues proactively. Trade policies and tariffs, resource protectionism, sustainability policies, labor actions, and armed conflicts are all current and rising threats, says S&P Global. Supply chain resilience isn’t just nice to have. It’s an absolute necessity.
So, how does technology streamline processes?
Automation drives efficiency. Humans are relieved of time-consuming and error-prone tasks that new technologies perform accurately and effortlessly. For example, warehouse automation can use data to issue purchase orders, populate invoices, and send order confirmations and tracking information to customers. Automation identifies cost-effective routes and carriers for shipments and facilitate inventory replenishment.
Advanced analytics power data-driven decisions. For supply chains, as with other businesses, data is the lifeblood. Data is available at every point of your complex supply chain. Tech-powered algorithms and predictive methods enable quick decisions to get ahead of disruptions. These insights, for example, can make the difference between proactively scaling inventory to meet a period of high demand or losing that business to competitors.
Collect data with IoT devices. IoT (Internet of Things) devices have become indispensable for managing a resilient supply chain. Sensors can be used in warehouses, shipping containers, and finished products to transmit usable data, such as the location and condition of goods, weather, traffic, etc. All can be monitored in real time so problems can be swiftly mitigated.
Strategies to build a resilient supply chain
You need a resilient supply chain. How do you achieve it? These four areas are a great start:
- Create visibility, which can only be achieved with a supply chain management platform
- Utilize scenario planning. By running scenarios, you’ll be able to see and evaluate options by adding and removing constraints so you can understand the cost, risk, and outcomes to guide decision-making. You get a high-level, future-facing view that offers more relevant insights than historical data so that you can drive your business forward
- Stress test. Using a digital replica of your supply chain, a stress test is data-driven to quantify your supply chain’s ability to absorb, adapt to, and recover from a disruption. You get invaluable visibility into the impacts of disruptions, and quickly identify how to recover and survive
- Supplier diversification. Relying on a network of suppliers instead of a single source is essential for supply chain resilience and agility. You can quickly switch strategies and adjust when the unexpected happens. A 2022 Ernst and Young Study found that 62% of industrial companies have significantly changed their supplier base since 2020 to become more resilient
By employing digital twins, artificial intelligence, and real-time data in manufacturing, you can anticipate issues and reduce production downtime.
Collaboration is crucial
Examining and fine-tuning your supplier base is critical for supply chain resilience. If you want true supply chain excellence and optimization, you also must focus on collaboration. Collaboration improves operational efficiency and informs decisions around inventory, production, and distribution. In the modern supply chain, collaboration means sharing data in real-time and clear communication every step of the way.
Collaboration enables joint problem-solving and accountability and improves forecasting to bring resilience. A great example is a large vehicle manufacturer, which gives suppliers clearly defined targets and performance metrics built into contracts, holding vendors responsible for continuous improvement in quality, cost, and delivery.
Overcome challenges to resilience strategy implementation
Change can be difficult, especially if there is resistance. This means leadership must be all-in on supply chain resilience strategy implementation. Buy-in must come from all company levels so everyone understands objectives and goals and the need for change.
Other barriers arise from the need to redesign organizational structure, including people resistant to change and faulty communication processes. To overcome this, communicate openly and often, and highlight the benefits. Empower stakeholders, including suppliers. Enhance engagement by describing mutual goals – quality improvement, cost reduction, improved efficiency, and mitigating risks.
It's vital that everyone is involved in the process and understands expectations. Leverage the expertise of both your team and your suppliers to create meaningful metrics and provide support and feedback to further the cause of continuous improvement.
The resilient supply chain in action
Conagra Brands, one of North America’s leading branded-food companies, achieved greater efficiency and cost savings while meeting rising consumer demand via supply chain solutions from Ryder. With over 9,000 SKUs under its brand, Conagra took a close look at its supply chain. The distribution of these products means funneling and delivering them in hundreds of locations daily while meeting the specific requirements of consumers in thousands of locations.
Always focused on innovation, the company partnered with Ryder to successfully meet the demands of its supply chain with an eye toward creating continuous efficiency and future planning. Ryder and Conagra have been partnering for more than 20 years, but the pandemic presented a unique disruption, and both companies rose to the challenge.
Conagra Brands experienced a tremendous volume surge, exceeding 150% growth for some products.Because of the surge, some locations went from operating 24 hours, five days per week, to 24/7. Ryder put new Centers for Disease Control safety protocols in place for employees, as well as ensuring the product integrity.
Ryder also quickly leveraged its transportation resources to create a pop-up dedicated fleet for Conagra to increase its distribution capacity. These processes and strategies meant the operation continued with service levels consistent with pre-coronavirus metrics, including 99% order accuracy and 99% on-time shipping.
Preparing for the supply chain of the future.
Resilience, as defined by the Cambridge English Dictionary, is “the ability to be happy, successful, etc., again after something difficult or bad has happened.” It’s further defined as the ability for something to return to its usual shape after being bent, stretched, or pressed. All of this requires flexibility, adaptability, and strength.
The resilient supply chain is one of continuous improvement. In this new age of supply chain operations, leaders should focus on the following priorities, per McKinsey. Number one is resilience. Second is agility, and third is sustainability. No one has a crystal ball, and anything can happen, so leaders must keep their eye on the ball and be ready for anything by developing a sound resiliency strategy.