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Strategies for Resilient Supply Chain

Strategies for Resilient Supply Chain

Management And Efficiency

It is a well-known fact that supply chain disruption may just be the biggest global shift that occurred during the post-Covid phase. Hence, in the present time, becoming resilient towards the environment is a necessity that cannot be neglected any further. Having a highly resilient supply chain helps in improving the visibility and ability in sourcing, manufacturing and distribution.
Various factors play a strong role in developing a resilient supply chain; from the relationship level of your supplier to the reliance level for providing any specific item. In order to improve the agility and flexibility of the operations, 6 effective strategies can be followed by the supply chain leaders.

  1. Inventory and Capacity Buffer

  2. The easiest way to improve resilience in the facilities provided by underutilized production and inventory excess for safety stock is through buffer capacity. However, the main challenge in this arises due to the expensiveness which might become difficult to justify. All the leading companies around the globe use buffers for new product launches and in order to expand towards areas with new growth opportunities in the form of surge capacity.

  3. Manufacturing Network Diversification

  4. Various companies have started to diversify their sourcing or manufacturing bases in response to the trade war between US and China. As a result, some companies have switched to new suppliers outside China whereas some existing partners have been asked to start supplying from elsewhere in Asia. Due to the disruption in the supply chain that has occurred in the past few years, the cost for retaining supply locations is now seen as a business cost rather than inefficiency.

  5. Multi-Sourcing

  6. The unfortunate natural disaster that took place in Japan and Thailand in 2011 caused noticeable disruption in the supply chain all across the globe. This presented a clear picture of the level of reliance companies have on a single source of supply. The automotive industry was facing difficulty in shipping even nearly finished cars to customers due to the missing components. Nonetheless, to mitigate this risk, multi-sourcing is the best way forward. For this, the supply chain leaders need to be aware of their supplier networks so that they can categorize them not just according to the spending but also through the revenue impact.

  7. Near-Shoring

  8. In order to reduce the geographic dependence in their global network and shorten or control the cycle time for the finished products, some companies may also opt for near-shoring. Even though regional and local supply chains can be relatively more expensive and add more players and complexity to the ecosystem, it allows the companies to have more control over their inventory. Moroever, help them in bringing the product closer to the end-user and become resilient.

  9. Platform, Product and Plant Harmonization

  10. To build a resilient supply chain, the products need to move faultlessly across the network, for this a harmonized regional network is important. One example for this can be the use of common platforms for various vehicle models in the automotive industry. Through this, the companies can standardize the components more specifically for those products that have less visibility and are not important to the customers. By doing so, the sourcing policies are simplified which in turn creates opportunities for placing higher volume amongst the suppliers and improving resilience.

  11. Ecosystem Partnership

  12. The impact that Covid-19 brought upon all the businesses and sectors across the world outlined the importance of having a diversified sourcing approach. However, it is also important to have a strong partnership with strategic raw material suppliers and external service partners to build a resilient supply chain for the future. Companies that have a smaller scale to support multiple locations independently need to build strong relationships with the contract manufacturers and suppliers in order to diversify their production and distribution across the globe.

Nonetheless, due to the dependency of the global economy on the supply chain, significant damage is caused to the businesses whenever any disruption occurs. Hence, having a resilient supply chain can help companies become flexible and adapt to unavoidable changes and disruptions, be it short-term or long-term.

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