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The term “resilience” is being used a lot right now in relation to the world’s supply chains, many of which proved to be anything but resilient during the early stages of the global COVID-19 pandemic. And while many of those networks have since bounced back, electronics buyers continue to face ongoing product shortages, supply interruptions, and other challenges when procuring goods from both domestic and global suppliers.
A new Association for Supply Chain Management (ASCM)-sponsored report attempts to break down some of the key challenges that supply chains are grappling with right now and explains what needs to be done to ensure higher levels of resilience in the future. Conducted by The Economist Intelligence Unit, the new benchmarking survey explored the use of business continuity plans, end-to-end supply chain visibility, and strategic supply chain resilience strategies to help strengthen the world’s supply chains.
Survey Says…
The ASCM survey also explored key issues like sustainability and climate change, both of which play roles in organizations’ ability to develop and sustain resilient supply chains. Some of the ASCM’s key findings include:
- For the last 30 years, supply chains emphasized leanness, efficiency, and cost control against a backdrop of deepening globalization. As supply chains were optimized, the risk landscape became more unpredictable. Even before the pandemic struck, trade tensions and geopolitical instability, along with extreme weather events and climate change, put pressure on supply chains. “For those who failed to take notice,” ASCM said in its report, “the pandemic has been a deadly example that we live in an interdependent and volatile world in which a number of complex risks can unfold in rapid and often surprising ways.”
- Business continuity plans and playbooks should include triggers outlining actions to be taken across a range of disruptions. Without detailed information outlining steps to be taken in the event of a crisis, business continuity plans may be of limited effectiveness. “During the pandemic,” it said, “many companies found that their business continuity plans lacked information about less critical processes which were magnified in importance in the middle of a prolonged disruption happening everywhere at once.”
- Companies lack end-to-end visibility, leaving them vulnerable to dynamic or unexpected risks. For over half of the companies benchmarked, the view of supply chains is based on internal data, or relies on siloed or outdated data-sets. “This limits their ability to detect emerging threats or calculate how a disruption will unfold across supply chains and business units,” the ASCM said, noting that high-performing companies build an “outside-in” picture through the integration of supply chain partners into demand forecasting and planning as well as systems that provide real-time data.
- Companies are building strategic supply chain resilience by forging strong long term relationships with key suppliers and customers. In a world fraught with complex risk, no company is an island. “High performers work with their supply chain partners by sharing best practices, by ensuring their partners’ systems are robust enough to support new product developments,” ASCM said, “or by providing financial assistance that preserves supply chain networks during disruptions.”
- There is a gap between rhetoric and reality where sustainable supply chain initiatives are concerned. According to ASCM’s survey, companies across sectors plan to build resilience over the next 3 to 5 years by making their supply chains more socially and environmentally sustainable. However, fewer than half (42%) of companies have set targets to reduce supply chain-related carbon emissions. “Target-setting is followed by more difficult tasks,” ASCM added, “such as establishing baselines and monitoring performance.
The Balance Between Efficiency and Resilience
In this era of increased turbulence, ASCM said smart companies are reconsidering the balance between efficiency and resilience. “Organizations need to prepare for a range of upstream and downstream disruptions, from those which can be imagined and anticipated, such as a factory fire or flood, to those which cannot, such as dynamic interactions of complex technological systems or the uncertain future of climate change,” it advised.
Smart organizations have taken 2020 as an opportunity to strengthen their supply chains for the long-term, ASCM concluded, and are taking a more global approach to resilience that goes beyond just readying themselves for short-term predictable shocks.
“Rather than dealing with specific risks one at a time,” Ohio State University Risk Institute’s Joseph Fiksel, said in the ASCM report, “companies are now adopting a strategic view of the risk landscape, and adapting their business processes and assets to better absorb shocks and remain competitive.”
