Supply Chains Resiliency

For many years, companies have invested to become more agile and slimmer, operating at higher and higher efficiencies. Resiliency, on the other hand, demands a company’s capability to deal with the unexpected. As an example, investing more in certain types of raw material inventory may reduce efficiency however is the premium to ensure availability of the products when an unexpected event causes disruption in the delivery of these raw materials.

Resiliency also implies having multiple sources of supply from different regions and different suppliers. Given the current geopolitical and socioeconomic dynamics in the world, it is highly unreliable to depend on a single source of manufacturing or raw material availability. To this end, supply chain design takes a critical role to ensure cold redundancies at every step of the supply chain. Simple what-if scenarios can identify the criticality of certain suppliers, subcontractors, types of equipment or regions that are likely to face breakdowns or disruptions.

As we recently witnessed in the aftermath of the cyberattack that hackers carried out against Colonial Pipeline, creating havoc on the East Coast of the U.S. due to fears of a fuel shortage, resiliency is needed not just in the physical supply chain but is critical in the digital supply chain as well. Companies need to ensure their data and IP are well-protected against the growing number of ransomware attacks.

Finally, creating digital supply chain twins to replicate the operations of the supply chain using S&OP and S&OE solutions has helped to provide better visibility for companies and identify their vulnerabilities and how to predict and respond to disruptions. Many companies are focused on the use of S&OP at this stage; however, in order to create a true digital twin, an S&OE solution is needed to provide true predictability and visibility.

Given the changes in the climate, growing regional conflicts, increasing volumes of transportation, digital market places and rising consumer expectations, disruptions in supply chains will only grow stronger and more frequently. As we have recently witnessed, such disruptive forces cause losses of hundreds of millions of dollars every year, so resiliency and digitalization should be critical priority items for every supply chain leader. 

Source: https://www.forbes.com/sites/forbestechcouncil/2021/08/04/supply-chain-resiliency---a-critical-lesson-from-covid-19/