3 Steps Towards Supply Chain Resiliency

As the world navigates through an unpredictable global market, supply chain resiliency has become a top priority for procurement professionals in Asia and Australia. To achieve supply chain resiliency, businesses must first thoroughly assess their current operational weaknesses to understand where to focus attention first. Often, supply chain resiliency requires a multi-pronged approach.

Preparing for resiliency

Poorly executed supply chain redundancies can lead to severe problems with resiliency. Most significantly, putting product delivery at risk as backup sources are not always as reliable as the primary source. Customer satisfaction can also suffer due to prolonged wait times while products are sourced from alternate channels, leading to missed sales opportunities and potential customer churn.

Adding to this - redundant sources that don’t match the original source’s quality or quantity, leading to returns, refunds, and even customer complaints emerging and then there’s the issue with suppliers.

“It’s important to ensure supplier qualification. You must ensure they are interacting with the right subcontractors with the right tools in place to engage them”
- Eric Geniaux, CPO, ING Australia  

What's more, to stay competitive, businesses must ensure their supply chain operations run smoothly. One way to do this is by incorporating AI and machine learning predictive analytics. Utilizing these tools helps avoid potential supply chain problems, ensuring operations continue without disruption.  

All these issues combined make it essential for companies to consider the far-reaching impacts of poor supply chain redundancies and take steps towards resiliency if they want to flourish in today’s digital age.

Step One: It's Time to Increase Redundancy

As the operational environment continues to shift and evolve, procurement organizations face significant challenges that test their existing management practices, forcing them to find new ways of operating and keep up with modern demands. Think of things like slowdowns or delays to your supply chain, complete shutdowns, safety stock, and more. Now, secondary and tertiary sources are essential to remaining competitive, while long-standing business models based on cost suppression and unit efficiency face harsher realities than ever.   

It might appear daunting for procurement teams to make the necessary changes in such an unstable market; however, there are several key questions they can pose t to facilitate a successful pivot. Reflecting on these elements can provide invaluable direction and help propel the procurement organization into a vibrant new era of success as they work to create an optimal supply chain.

  • Building supply chain redundancy is essential for businesses of all sizes to protect against unexpected disruptions in the materials or components necessary to run their operations.
  • Building a backup stockpile of inventory helps create a buffer that can serve higher-value customers and other mission-critical areas without interruption.
  • To make this cost-effective, businesses must weigh the costs of maintaining additional inventory against the potential revenue losses from disruptions and the increased prices due to shortages.
  • Companies should also diversify their supplier portfolio to ensure they have multiple supply options at any given moment, which reduces dependence on a single partner or sourcing location.
  • Having suppliers available in niche areas can be beneficial, too; businesses should make sure these suppliers have developed a redundancy plan so everyone along the supply chain knows what to expect during unpredictable times.  

So, what's the next step?

Step Two: Be As Flexible As Possible

Companies worldwide realize they must stay agile and be flexible to changing consumer demand or face disruption or failure altogether. This is where bimodal supply chains come in, separating the traditional and digital parts of their operations. For example, an apparel company might keep a static inventory of core items while stocking additional trend-based items as needed. But bimodal supply chains aren't the only way companies are achieving more flexibility. With technology ever-evolving, organizations now have access to tools to quickly adjust production levels, suppliers, and staffing depending on customer demands. In addition, repurposing existing assets for multiple markets can help companies achieve agility through better utilization of resources, thus reducing costs by creating greater efficiency.

Bimodal supply chains are revolutionizing how specific industries operate, offering significant advantages for companies looking to stay ahead of the competition. A bimodal supply chain balances efficient and innovative operational strategies, allowing organizations to move swiftly while exploring game-changing opportunities. For example, an automotive company might rely on a bimodal supply chain to rapidly bring new car components to market while simultaneously developing never-before-seen technologies in autonomous vehicles. Similarly, a retailer may deploy a bimodal configuration to streamline its day-to-day operations while utilizing emerging tools and services like AI or integrated analytics to understand its business and customers better.

Furthermore, organizations often outsource certain functions to providers with more expertise in specific areas like 3PL services – allowing them more freedom to focus on higher-value tasks such as business strategy. All these strategies ultimately put organizations in a better position to remain competitive in uncertain times.

Supply chains are required to stay agile and adaptable in their operations. To do this, there are several critical types of flexibility:

  • Volume, scheduling
  • Physical, design
  • Material energy
  • Geographic location
  • Information visibility
  • Control process

Each form offers the ability to change processes or products quickly when needed - adjusting orders based on customer needs or switching out materials for different standards/values. An effective supply chain depends heavily on its versatility!

A prime example of this: To remain adaptive and dynamic in their operations, supply chains are now turning to a range of neighbouring countries for sourcing materials. Everywhere from the Philippines and Vietnam to Thailand are great sources instead of choosing the more expensive products manufactured in China. The reality is that these products from smaller countries are just as high-quality as the ones built in China.

Download the 2023 Innovation Brief to read the full article for free

Download the ProcureCon Australia 2023 Agenda to find out how you can learn more about supply chain resiliency.

Day 1, Keynote Panel: Supply chain disruptions and the threat to economic stability – What solutions can you undertake now to protect your operations, and manage cost pressures?

Day 2, Opening Keynote Panel: The future of procurement in the “new normal” – How can you best prepare your operations for the next disruption to ensure smooth running of your supply chain business?

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