The continued globalisation of supply chains has opened many doors for businesses worldwide—but the door swings both ways, bringing with it a series of unforeseen events that can have a significant ripple effect on—and impede with—daily business operations.
This is because supply chain disruptions are no longer a matter of if, but of when.
Which means that supply chain resilience is more important than ever.
Gartner predicts that by 2025, supply chain risk management will be a key success driver for more than 50% of organisations.
The time to prepare is now. Here are 7 steps you can take to future-proof your supply chain.
Stock inventory and buffer capacities
If the coronavirus pandemic has taught us anything, it’s that we should always have enough stock at hand, which is why many organisations are now increasing their stock levels in order to safeguard the production against delayed or missing shipments.
This is because seaports and other transport routes might shut down, and manufacturing plants might have to close due to an outbreak, so the most straightforward way of dealing with these potential risks might be to ensure an inventory optimisation.
Still, an increase in inventory goes hand in hand with an increase in working capital and expenditure for storage capacities—making these measures potentially hard to justify to C-level executives.
Tier-N transparency
Now, imagine a world in which supply chain risks and supply shortages can be predicted—sometimes even weeks or months in advance.
Not only would organisations have enough time to find alternative solutions, such as making shipping schedule adjustments or finding back-up suppliers, but they would also gain a significant advantage over the competition. This is because, by having enough time to react to—or even avoid—events that threaten your supply chain, you can ensure business continuity.
For example, organisations that know in advance that one of their suppliers is at risk of not delivering the needed product have additional time to evaluate the situation and find alternative suppliers, if needed. This time advantage can separate a successful business, one that manages to reroute a shipment or find a new supplier, from one that is taken by surprise and, consequently, takes a direct hit in the form of a production standstill, thus incurring massive losses as a result.
But how can you attain this level of information?
A solution would be financial data providers, which supply valuable first-level data. Unfortunately, this solution only covers the financial aspect, and lags behind, as financial data is only reported annually.
Another solution would be data providers like Prewave, that can:
The past couple of years have shown us that organisations are only as strong as their most vulnerable suppliers. Without Tier-N transparency, your business is exposed to significant risk. Luckily, with a partner like Prewave on your side, you can easily monitor, predict, plan for, and even avoid supply chain risks.
To discover everything Prewave can do for your business, book a demo today!
Diversifying manufacturing networks
Also known as the textbook method of risk diversification, diversifying manufacturing networks can be a game-changer in achieving supply chain resilience. By finding new suppliers for each needed part, you ensure the continued operations of your business, regardless of potential supply chain risks. This is because, if one supplier cannot deliver due to an event outside their control, you will always have a back-up solution that can take their place. As such, the parts will still arrive on time, and the final product will be delivered to your customers without any delays.
Read more: The Ultimate Guide to Supply Chain Resilience
However, this method of multi-sourcing can only be achieved by having contracts with multiple suppliers, or with sole suppliers with multiple production locations. The risk lies in increased prices, as order quantities have to be split between suppliers, thus diminishing economies of scale effects and increasing purchasing costs through additional supplier evaluation and onboarding.
Nearshoring
Geographic dependence can be reduced by working with suppliers that are located at a closer distance to the company’s own manufacturing plants. Logistical risks and impacts, such as the potential closure of seaports and international trade limitations, can be mitigated this way.
Global supply chains should be optimised to mitigate the risk of long supply routes, especially when the additional cost of sourcing locally doesn’t outweigh the advantages.
Product and platform standardisation
By diversifying your product portfolio, you automatically elevate the complexity of the sourcing process. This is because more products call for more individual parts, which might significantly increase the risk of part shortages—and the production, as a whole.
One way to combat the diversification of manufacturing parts is through the usage of standardised components for multiple products. The automotive industry has been at the forefront of this development, with automotive platforms shared between various car models—and even manufacturers.
Fostering partnerships and supply chain ecosystems
Collaboration and communication represent the building blocks of a resilient supply chain. When you ensure continued communication and a strong collaboration with all your suppliers, regardless of level, you’ve taken an additional step towards supply chain resilience.
This is because close partnerships translate to an open communication of potential issues, risks and challenges, which, in turn, opens the door to a collaborative effort in averting risks and minimising impacts. At Prewave, we place great emphasis on this, which is why the Prewave supply chain network is constantly looking to create and foster more transparent supplier networks—by allowing suppliers to update and comment on any developments.
Building a strong organisational culture
Any actions taken to ensure a resilient supply chain will only take hold if the organisational culture allows for—and rewards—resilient thinking. This means that ensuring supply chain resilience is the responsibility of the organisation, as a whole, and not just of management. Supply chain optimisation processes have to be ingrained into the very DNA of an organisation aiming to build and foster agile supply chains.
To recap
There are a number of steps you can take to achieve supply chain resilience. However, as companies advance towards building truly resilient supply chains, you also require a competitive edge—a partner that will give you the needed tools to combat and withstand any crisis.
At Prewave, we’ve built and perfected an invaluable tool that increases supply chain visibility and averts risks before they happen—leaving you with the certainty that nothing in your supply chain will go unnoticed.
