A resilient supply chain is one that can operate close to normality despite an unforeseen event.
We build resilient supply chains by identifying each constraint in the network and measuring its impact on business continuity. We then determine the appropriate buffers to protect the critical constraints and mitigate the risks. The constraint could be a production capacity, a safety stock level, or a lead-time.
Like all risk mitigation, resiliency doesn’t come for free and it doesn’t make sense to have the same protection for all product lines or all geographies. In addition, resiliency must consider not just your own physical network but the impact on partners like your critical suppliers.
At QAD DynaSys we always advise a structured approach to managing resiliency. It should be done as part of your periodic S&OP review of the supply chain network. And do it without the pain of a pandemic in the front of your mind.
But according to Gartner, ONLY 21% of the companies stated that they have a highly resilient network. A supply chain that can absorb disruption without the need for a complete redesign is called a resilient Supply Chain. Is your supply chain resilient?
How to add Resilience to Your Supply Chain?
So, the question is how to achieve this required resiliency.
First of all, companies need a Functional Alignment from end to end of the Supply Chain. You cannot work in silo otherwise you will solve one problem here without solving the full problem. It is important to have global visibility on the supply chain allowing you to simulate in real-time the impact of any change.
You will need to fully integrate the finance in your Supply Chain: It will allow you to make holistic decisions to support corporate goals like for ex. the impact on Cash … but also to immediately see the financial impact of your decision … Indeed, planners will have to take immediate decisions that can strongly impact the finance of your organization.
But also, you need to be strongly Adaptive …meaning taking into account very quickly the changes in your Supply Chain. Every day, every second your supply chain is evolving … and today you have access in real-time to all the data and the possibility to be informed of every change. So, you need to adapt your Supply Chain decision taking into account real time data that comes through Digital Supply Chain Twins.
For this, you can use predictive analytics together with Machine Learning to adapt decisions immediately when new insights become available.
But as already introduced your organization needs to be Agile. You need to ensure the Supply Chain can be planned and re-planned on-demand based on new data and able to quickly react and change your plan
For this you need to secure the 5 following steps:
- Being alerted on every major change
- Be able to immediately measure the impact on the full Supply Chain
- Be able to propose several solutions
- And with this global vision of the different alternatives and their consequences, to be able to quickly validate one of the proposed scenarios and the
- To follow immediately the execution of the selected plan.
Beware of the Black Swan
You cannot predict what will happen … but you can anticipate that some unpredictable events will happen, we call them Black Swans. We do not know their nature (pandemic, tornado, a Tariff war…) but we can predict their impact … we need to pre-build contingency plans based on the risk analysis done in advance.
If you have these 5 pillars, you will be amongst the 21% of companies that have a resilient supply chain and you will be able to absorb future shocks.