Supply Chain Resilience: Lessons Learned from Disruptions and How to Prepare for the Future
This is a writing sample from Scripted writer Melissa Orozco
COVID-19 did a number on supply chains. Many supply chains weren’t nearly prepared for the new reality that the pandemic created. From having to hold onto billions worth of goods to dealing with logistical nightmares and dealing with delayed order fulfillment, the pandemic revealed a lot of vulnerabilities in the supply chain. Since then, the buzzword—supply chain resilience—has become ubiquitous in the industry as businesses try to remain functional in an unpredictable environment.
What is Supply Chain Resilience?
When you think about supply chain resilience, two terms should come to mind: resistance and recovery. With these terms, we can define supply chain resilience as supply chain networks’ ability to resist or minimize the impact of disruptions and recover or bounce back to normal operations.
How Did COVID Affect Supply Chains
When the pandemic hit, the first casualty in supply chain processes was logistics. Suppliers couldn’t deliver raw materials to manufacturers, and businesses couldn’t deliver products to customers.
But it wasn’t all bad. In the midst of what's considered one of supply chains’ biggest disruptors, the pandemic also had some positive effects on supply chains. It created opportunities for technological advancements and innovation solutions, all aimed at improving supply chain resilience.
Lessons Learned from COVID-19
While the disruptions caused by the pandemic brought to light so many hidden shortcomings in supply chain processes, there are a few lessons we can learn from them. One of these lessons requires supply chain managers to change their management strategies and adopt those that enhance supply chain resilience. These strategies include:
Adopt Multisourcing
Instead of just depending on one supplier, businesses should form relationships with multiple suppliers—globally and locally. This ensures business continuity in case of disruptions such as COVID-19, which saw borders getting closed. Businesses that only relied on one supplier ended up lacking the raw materials required for production, consequently affecting overall business revenue.
Leverage Inventory Buffers
This strategy encourages businesses to move away from lean inventory management practices like just-in-time. Just-in-case inventory management encourages businesses to have extra inventory (buffers) in preparation for disruptions that affect production. This way, businesses can still meet customer demands.
However, this strategy can be expensive for businesses because it involves additional storage and handling costs. Therefore, this strategy requires careful optimization to ensure businesses do not incur losses due to unsold and outdated inventory.
Implement Supply Chain Technology for Visibility and Control
Visibility into entire supply chain processes is essential for control and, ultimately, supply chain resilience. Businesses can invest in supply chain technological solutions that enable real-time monitoring and analysis of various supply chain data like demand forecasting, shipment tracking, and control room visibility. This helps businesses to predict and prepare for supply chain disruptions and emergencies efficiently.
Conclusion
Pandemics and health crises aren’t the only disruptions that supply chains should prepare for and learn from. Businesses should also consider factors like political instability, natural disasters, economic volatility, and cyber-attacks, and how they can affect supply chains. Therefore, supply chain managers must stay informed on the latest issues affecting supply chains and ensure they take measures to enhance supply chain resilience for business continuity.
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