4 Strategies for Building a Resilient Supply Chain in a Remote World‍

The resilience of a supply chain is determined by its capacity to resist and recover from disruptions. Around the world, supply chains faced major disruptions during the Covid-19 pandemic. 

Then again in 2022, the Russia-Ukraine crisis brought about another major disruption in the supply chains around the world. This created an urgent need for resilient, agile, and flexible supply chains.

In a 2022 survey by Ernst & Young LLP, supply chain executives identified different action points to recover from the disruptions. These action points focused on recovering stability in the supply chains and making them resilient against future disruptions.

This article looks at some of the action points outlined in the survey and strategies to implement them. We will cover 4 key strategies to help you build a resilient supply chain:

1. Diversification of Suppliers
2. Increasing Visibility & Transparency
3. Implementing Agile Planning & Forecasting
4. Developing Digital Infrastructure

These strategies will help you mitigate several risks associated with supply chains so that you can keep your business despite various challenges.

I. Strategy 1: Diversify Suppliers

In the Digital Trends Supply Chain Survey of 2022, companies have expressed concerns over various risks associated with suppliers (image below). If you are dependent on just one supplier, your entire supply chain may come to a standstill, if any of these concerns come true.

You need multiple suppliers to mitigate these risks. Having multiple vendors can also help you create a flexible and agile supply chain. If one of your suppliers fails to deliver, you can rely on other vendors to fulfill the demand. This kind of flexibility is not possible if your entire supply chain is dependent on just one supplier.

You can identify new suppliers for your business through trade conferences, trade publications, and targeted internet searches. Once you have shortlisted qualified suppliers, you need to assess their potential to support your supply chains. 

Criteria to assess new suppliers:

1. Trade Certifications & Licenses 
2. Competitive Pricing
3. Price Change over a Period
4. Output Potential
5. Financial Stability
6. Delivery Lead Time
7. Technological Infrastructure
8. Customer Reviews
9. Ethical Practices
10. Geo-political Risks

You need to list several potential suppliers so that you have leverage when negotiating contracts. You can even go for short-term contracts with several suppliers to sample their service quality. Based on your experience with different vendors, you choose long-term partners for your supply chain.

II. Strategy 2: Increase Visibility and Transparency

A large part of supply chain management includes remote operations with little to no visibility. Because of this, supply chain managers face challenges with the flow of information, traceability, transparency, compliance, and monitoring progress.

The lack of visibility creates uncertainty over supply chain operations and leaves the businesses underprepared to face disruptions. Despite being one of the top priorities, only 37% of supply chain executives have some visibility over their operations. While only 6% of companies have complete visibility over their supply chains.

Businesses can use a variety of software and tracking tools to gain visibility over their supply chains. These include project management software, GPS tracking tools, communication platforms, automated inventory management software, and logistics management platforms.

The software allows you to keep tabs on several remote operations simultaneously. You also get real-time updates on individual tasks. This allows you to control disruptions in the supply chain. This will help you identify potential delays in advance and update your customers regarding the same.

You can redirect the process flow remotely and intervene when things are not going as planned. Without visibility, you are dependent on others to control the flow of information and consequently, your supply chain operations may suffer.

III. Strategy 3: Implement Agile Planning and Forecasting

Another major advantage of using software is data analytics. You can use the data generated from supply chain management software to analyze the performance of various supply chain operations. This helps you identify problem areas and bottlenecks in the supply chain.

The data also helps you make accurate forecasts regarding future demands and supply chain requirements to meet those demands. You can use sales and marketing data to predict the demand for different products in different regions. Then you can look at the key performance indicators (KPIs) of your supply chain to gauge its potential to meet the demand.

You also need to develop an agile supply chain so that you can change the flow of resources, production, and delivery as needed. This is difficult for the manufacturing stage, but you can compensate for this by creating a more flexible logistics operation. You can also diversify your manufacturing operations based on target markets. It will allow you to redirect the flow of the supply chain to meet the demand.

Steps to create an agile supply chain:

1. Diversify suppliers based on manufacturing locations.
2. Negotiate flexible contracts with suppliers.
3. Diversify manufacturing locations based on target markets.
4. Identify warehousing close to target markets.
5. Use software to track inventory.
6. Distribute inventory based on demand forecast.
7. Diversify logistics operations with business-owned fleets, independent contractors, and 3PL services.
8. Use the eCommerce micro-fulfillment model to ensure faster delivery.
9. Leverage supply chain management software to manage operations remotely.
10. Use data analytics to drive supply chain decisions.
11. Train the workforce for agile operations.
12. Use data analytics to identify opportunities for improving efficiency and reducing costs.

Accurate demand forecasting combined with agile supply chain management will not only help you manage existing customers but also make it easier for you to target new markets.

IV. Strategy 4: Invest in Digital Infrastructure and Security

Many of the supply chain operations can be digitized to improve efficiency, visibility, transparency, and security. 64% of supply chain executives find the need for a complete digital transformation in supply chain management. The race for digitization is predicted to turn 45% of supply chains into autonomous operations. 

The supply chain software you need depends on the scope of your operations. To create a digital infrastructure, you would need to introduce the following tools into your supply chain.

Order Processing Tools: For order management, invoicing, customer service, customer database, sales database, and demand forecasting. Examples of Order Processing Software:

• Skubana
• Brightpearl
• Quickbooks Commerce

Supplier Management Tools: For placing procurement orders, managing multiple suppliers, analyzing spending, and tracking supplier performance. Examples of Supplier Management Tools:

• KissFlow Procurement
• Procurify
• Procureport

Inventory Management Tools: For managing optimum inventory levels, cataloging inventory, managing tracking inventory, preventing under or over-stocking, and managing multiple storage facilities. Examples of Inventory & Warehouse Management Tools:

• Think Aisle
• Zoho Inventory
• Logix Platform

Logistics Management Tools: For tracking order fulfillment, GSP traceability, remote warehousing, and shipment tracking. Examples of Logistics Management Tools:

• ShipHawk
• OrderHive
• Oracle Transportation Management

Complete Supply Chain Management Tools: Instead of digitizing individual aspects of supply chain management with different software, you can bring all operations to one platform. This type of software allows you to manage all operations with a single platform. You can also use automation features to streamline operations. Examples of Complete Supply Chain Management Tools:

• Microsoft Dynamics 365
• Oracle Netsuite
• Magaya Supply Chain

You can also use automation tools like Zapier, Breakout, Butternut, etc. to connect different software. This can help you develop automated workflows which can help you bring efficiency to your supply chain and reduce the cost of operations.

VI. Conclusion

Let’s quickly summarize the strategies discussed in this article:

• Adopt a multi-sourcing model to reduce dependence on one supplier.
• Leverage digital tools to gain visibility over the supply chain.
• Use data to forecast demand and analyze the performance of your supply chain.
• Invest in digitization and automation to improve efficiency, reduce costs, and create autonomous workflows.

These four strategies will help you build resilient supply chains that can withstand a variety of social, economic, and geopolitical disruptions. Additionally, these strategies will also help you mold your supply chain to meet present and future demands.