The onset of the COVID-19 pandemic decimated global supply chains. Businesses and their customers suffered as the global crisis hampered product, service and delivery systems. Public health outcomes were negatively impacted by shortages of quality masks and life-saving ventilators.
This massive disruption exposed how fragile global supply chains can be. Businesses scrambled to pivot and repair supply chains, adapting operations, sourcing, manufacturing and distribution as needed. Given this, today's supply chain leaders are focused on building the supply chain resilience needed to prevent the crippling effects of future disruptions.
The online Bachelor of Science in Business Administration (BSBA) – Global Supply Chain Management program at Northern Kentucky University (NKU) prepares students to be leaders in this complex field. Through intensive study of strategic planning, global logistics management, risk mitigation and problem-solving, students learn how to foster supply chain resilience and face the challenges of future disruptions.
How Do Disruptions Negatively Impact Supply Chains?
Today's global supply chains rely on interconnected worldwide networks of materials sources, manufacturers, warehouses, distribution channels and logistics providers. Disasters and volatile conditions of all sorts can easily disrupt such complex supply chains.
Environmental disasters can impact shipping and logistics. New regulations may affect material and labor sourcing. Military conflict can shut down supply chain processes in an entire region. Social movements may shift public perception, ethical concerns and viability of certain supply chain channels. Plus, disease outbreaks can disrupt many aspects of supply chains locally and globally, as evidenced by the COVID-19 pandemic.
Supply chains are vulnerable to disruption in nuanced ways — largely because many supply chain factors rely on the success of one previous step. In many cases, every finished product is dependent on every aspect of a singular supply chain functioning properly and efficiently. If any supply chain function is disrupted, the whole supply chain and the entire production process can grind to a halt.
This can result in skyrocketing demand as existing inventory is depleted. Production and delivery times can extend exorbitantly, and customers might look elsewhere for similar products with current availability. During supply chain disruption, companies lose business and revenue in the short-term. They potentially lose customers and revenue in the long-term, affecting irreparable harm to a business's bottom line.
Clearly, building resilience to supply chain disruption is essential for business success and continuity through challenging times. Here are five strategies supply chain leaders are employing to foster supply chain resilience:
- Adopt Agile Practices
Agility underscores many supply chain resilience strategies. To address risk analysis of potential disruptions, supply chain managers can incorporate and plan for agility in current operations and disaster response plans.
Adopting agile practices and preparing for operational pivots allow for rapid adaptation and quicker or virtually immediate recovery when disruptions, disasters and emergencies occur. Thus, agile supply chain management strategies are essential for continuity and resilience.
- Stress Test Supply Chains
Planning for agility and resilience takes more than analyzing and mitigating risk. Supply chain management professionals should inspect each link of the chain, simulating various disasters or disruptions to find weaknesses and flaws in supply chain design. Identifying and remedying such problems proactively can build resilience and maximize the effectiveness of response and continuity plans.
- Diversify Supply Chain Channels and Multisourcing
Relying on singular sources for raw materials, manufacturing or labor can disrupt a single source, shutting down the entire supply chain. Diversifying and multisourcing supply channels logically builds resilience to such disruption.
- Use Strategic Inventory Management
Producing and storing a strategic excess of inventory (called "buffer capacity") can help prevent inventory depletion and exhaustion during supply chain disruption or surging demand. Securing and retaining contract manufacturers for surge needs (or disruption needs) can also help maintain continuity in inventory and distribution.
- Go Local
Securing supply sources closer to the location of consumers (called "nearshoring") can help reduce reliance on potentially fragile global supply chains. It can also help businesses move products through the supply chain to end consumers quicker and more directly, a boon when more complex, longer distribution channels are interrupted by disruption.
Taking these and other steps to build agile and resilient supply chains is essential for weathering disruption successfully. Of course, strategies like multisourcing, increasing inventory buffer capacity and nearshoring sourcing and production sites can be expensive and time-consuming. However, the immediate and long-term loss of revenue from extreme supply chain disruption often outweighs the moderate regular expense of building strategic resilience.
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