Building a Resilient Supply Chain: Importance, Challenges, and Strategies

Author

Liberty Advisor Group

A resilient supply chain is defined by its capacity for resistance and recovery. As a result, it can mitigate most supply chain disruptions and limit their impact on business operations. These operational risks and interruptions can threaten multiple supply chain areas. For example, global disasters like COVID-19 could have far-reaching effects on suppliers, supply chain logistics, and workforces[1] Other disruptions include sudden market trends, unexpected competition, new government laws, and regulations, as well as changes in customer shopping behaviors.

Today’s supply chains are in the spotlight for several reasons. These include evolving customer expectations, the need for sustainability, and the realization that many business leaders are navigating economic disruptions using legacy systems, making it difficult to respond. The most agile and resilient supply chains do more than resist and recover. They have built-in processes and modern technologies to anticipate, forecast, and respond quickly to future risks and opportunities. This makes them agile, connected, and adaptive. In fact, businesses are moving from disconnected and disparate legacy systems to modern supply chain resilience strategies and systems. As a result, there is a growing urgency to build flexible and extensible platform approaches to unify data across these systems and usher in the era of resilience to positively impact the bottom line, gain competitive advantage, and exceed customer expectations.

In this paper, we discuss the need for building a resilient supply chain, the challenges to overcome, and the strategies to adopt for success.

Why Should Organizations Want a Resilient Supply Chain?

According to this 2022 research report [2] from HBR Analytic Services, 97% of respondents said resilient supply chains positively impact the bottom line. Furthermore, it shows that strategic leaders are ready and willing to embrace supply chain resilience strategies.

Risk management has always been challenging for supply chain systems because even a slight problem in an isolated part of the world can compromise the entire global supply chain. So when major worldwide events and trends occur, the potential for global supply chain disruptions is enormous. Hence, the need for organizations to embrace resilient supply chain systems.

From the HBR Analytics Services report, it is clear that opportunities lie with improving and updating the disparate legacy systems currently in place, as only 11% of respondents said they rely on modern, integrated platforms with best-in-class applications.

Still, there is a high appetite and excitement for an orchestrated digital infrastructure, with 76% of respondents reporting they were in the planning stages of implanting digital infrastructure into their supply chain. Moreover, they all agreed that building resilience with modern systems and using a data-first approach was the way forward.

How Supply Chain Resilience Works

A good supply chain management responds quickly to operational disruptions and has flexible contingencies in place. It should also forecast and anticipate disruptions in the chain and avoid or mitigate them altogether. It should play both defense and offense using modern technology.

Its characteristics include:

  • It works by optimizing production using supply chain planning to synchronize all components and drive greater visibility and agility. As a result, it helps organizations anticipate issues, limit the impact of disruptions, as well as improve operations.
  • A resilient supply chain understands and leverages data. It is empowered by artificial intelligence and machine learning and uses modern databases to analyze and store big data.
  • Resilient supply chains diversify suppliers and manufacturing partners, making the cost of retaining multiple locations a going concern.
  • They implement capacity and inventory buffers.

The benefits of resilient supply chains are more efficient operations, improved productivity, and risk reduction.

Supply Chain Challenges to Overcome to Remain Competitive

Supply chain logistics are constantly evolving. The pandemic disruptions of 2020 caused significant market shifts, exposed the weaknesses of legacy systems, and brought to light new challenges for companies seeking to remain competitive.

The biggest challenges since the 2020 pandemic included port congestions, manufacturing delays, factory shutdowns, extreme weather events, and even the infamous Suez Canal blockage of the Ever Given.

As companies contend with building resilient supply chains moving forward, they must overcome the following challenges to stay competitive.

1. Disruptions

66% of survey respondents [2] said their supply chains were still recovering from recent disruptions. Unanticipated outcomes like transport delays, labor shortages, reduced production at manufacturing plants, as well as geopolitical issues are some of the disruptions companies must deal with today.

2. Lack of Flexibility to Respond to Market Needs

Supply chain flexibility allows it to function normally by accommodating the daily changes that naturally occur. But unfortunately, many supply chain professionals lack modern platforms to distill meaningful insight from big data.

3. Absence of Qualified Talent

A 2020 survey of the state of the US supply chain landscape by CSCMP found that 64% of professionals reported their organizations had a talent shortage, which was severe in specialized areas like logistics and transportation.

4. Poor Data

One of the biggest factors hampering supply chain operations is data and technology issues, as cited by 33% of the HBR Analytic Services report respondents. The challenge of insufficient data ranked higher than difficulty finding talent with relevant skills and expertise and poor collaboration between teams and external partners. Part of the problem is the inability to access data quickly and efficiently to facilitate informed decision-making. Others cited poor data visibility as another challenge.

5. One-off Siloed Systems

In typical supply chains of the past, business functions would stand up solutions that serve a single purpose, such as inventory tracking, supply chain optimization, or warehouse management. Therefore, if these siloed functions fail to talk to others, it becomes a challenge to share information.

6. Poor Collaboration with External Vendors

Poor collaboration with external vendors often breaks down due to non-integrated objectives, processes, and systems. In addition, external silos between companies and their suppliers can also lead to poor collaboration. Collaboration cannot occur without the tools and processes needed to create multi-tier and end-to-end visibility across the supply chain while sharing data and coordinating responses.

The Resilient Supply Chain Strategies Organizations are Adopting

Many new intelligent strategies and innovations promise to reduce supply chain costs and increase efficiency. Organizations looking to take advantage of these strategies and technologies must consider the following:

  • Voice of the Customer: Identify where customers place the highest value
  • Reduced Inefficiencies: Identify how AI and ML can help with labor efficiency and resource shortages
  • Reduced Disruptions: Identify products that you can produce closer to home to reduce the reliance on other countries
  • Manage Costs: Identify areas where you can reduce operating costs, such as streamlining ordering processes, managing inventory, making use of available space, tracking performance, automation, monitoring customer demands, and external vendor assessments and risk analysis
  • Realized Value from Data: Supply chain resiliency and planning depend on data-driven insights. Companies combine data platforms with AI capabilities to get value from their data and make real-time decisions.

New Technologies

Integrating digital transformation and new industry 4.0 technologies into global supply chain operations is a growing priority for business leaders. Such digital transformation and modern technologies give businesses the competitive edge and resilience they need to respond quickly to opportunities and disruptions and stay ahead of the curve.

The developments below are slowly making a positive difference in building resilient supply chains. Firstly, they are enabling companies to locate factories closer to home. They are also improving supply chain operations and reducing the time companies take to onboard and train workers.

1. Artificial Intelligence (AI) and Human Intelligence (HI)

The maturity of AI and the ability of humans to see it offers new cost savings. Significant advances in collaborative robots (cobots) have made direct human-robot interaction within shared spaces possible. Therefore, manufacturing facilities combine AI and human intelligence to lower labor costs and retain human oversight.

2. 3D Printing

Advances in additive manufacturing, commonly called 3D Printing, have made it possible for companies to produce products and components at lower costs. They are also shortening the manufacturing process in facilities closer to home and reducing the reliance on distant suppliers.

3. Recognition Technology

Manual manufacturing processes like automobile engine assembly use AI-driven action recognition technology to combine live video with analytics. This ensures workers can correctly follow complicated steps resulting in higher productivity and better quality control. It also produces datasets used to improve the manufacturing process.

4. Digital Manufacturing Solutions

They track product manufacturing across workstations and enable the input of real-time data. It leads to end-to-end traceability and ensures quality control by allowing only high-quality parts to move downstream.

5. Three-Dimensional Simulation

These technologies allow manufacturers to use digital twins to simulate their processes, factory layout, assembly design, and workstation design.

6. Logistics Technology

Companies are investing heavily in logistics technology tools used in warehouse management, cost-effective routing, and load matching.

7. Modern Databases

Modern databases help companies optimize their systems because resilient supply chain solutions rely on data, real-time insights, as well as advanced analytics.

In Conclusion

Building a resilient supply chain with built-in flexibility and visibility is critical for organizations looking to survive and thrive in the highly competitive landscape with heightened customer demands. Organizations must modernize their digital infrastructure and integrate new technology with data-driven practices to fully realize a supply chain’s competitive offerings.

At Liberty Advisor Group, we understand how complex this process can be. Our decades of supply chain experience allow us to help you transform your supply chain while reducing operational costs and improving margins. Contact us to learn more about our services and how they can help you reap the rewards of a truly resilient supply chain.

[1] – WEForum.com

[2] – Harvard Business Review

Author

Liberty Advisor Group

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