When it comes down to it, supply chain risk is inevitable. In recent years, it has become a big concern for many companies. The benefits that come with offshoring, single sourcing, and increased automation also come with potential setbacks. For example, take a single source supplier. You can save money or achieve a high level of quality control. But, what happens if that single supplier goes out of business or has a lull in their production for an unforeseen reason? This is where supply chain resilience comes in. You can still reap the benefits without worrying about the risks.
Taking risks doesn’t have to be a bad thing. Gaining visibility into potential risks will allow you to develop a contingency plan.
The first step in creating a supply chain resilience strategy is gaining visibility. With visibility, you will have access to real-time data. This detailed info will make an in-depth analysis possible. You will know what is going on in every stage of your supply chain. As a result, you can identify potential future issues or highlight a current vulnerability. It is difficult to prepare for a scenario when the possibility of it occurring is never examined.
According to PWC, 75% of companies experience a least one major supply chain disruption a year. We can’t predict exactly what may happen. But, with insight we can make a solid list of suspects. Outlining potential disruptions can give you a leg up on your competition. If disaster strikes, other companies will be struggling to hatch a plan to deal with it. However, your company will be putting your supply chain resilience plan into action and taking some of their market share. Your shareholders will love that.
In planning for contingency, we try to cover as many scenarios as possible. But “[as] we all know from Murphy’s Law, no matter how well you plan, things are still going to go wrong that you didn’t anticipate.” That’s why it’s vital to have a contingency plan that covers all.
How do you do that? First, identify areas of risk: profit loss, technology disruption, bad publicity, etc. Next, have a plan in place that can be molded to the specific situation. You won’t know exactly what will go wrong but having an actionable plan will give you some peace of mind. Keep calm and carry on.
Any area of a supply chain is not independent of the other parts. By definition, a supply chain is a network-wide concept. For this reason, risk management has to be network wide too. This is where collaborative relationships with supply chain partners comes in. It can help to enhance your plan and mitigate risk. You need to work together with your suppliers and buyers to create a cohesive and well-oiled machine.
When you focus on supply chain resilience, you give your company a competitive edge. You can react more quickly to disruptions and pull ahead of the competition. You can also gain visibility, identify vulnerabilities, and collaborate with your partners. These benefits will help to create an actionable contingency plan to secure your organization’s future.