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4 Ways Manufacturers Can Build Supply Chain Resilience

May 31, 2023
More than three-quarters of manufacturers experienced externally caused disruptions to their supply chain in 2022, yet 30% of companies have yet to take any steps to improve their resilience.

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Resilient supply chains are prepared for unforeseen disruptions; react and recover quickly; and emerge stronger post-event. Never a “set-it-and-forget-it” exercise, supply chain resilience demands a dedicated and deliberate strategy focused on strengthening the organization in the face of the unexpected.

“Resilience is crucial to the manufacturing industry, as generating revenue relies on adding value at each link of the supply chain, from the raw materials to the finished product,” Hubs says in the new Supply Chain Resilience Report 2023. Based on a November 2022 survey of 334 manufacturers, the report says 76.6% of companies experienced some form of external disruption to their supply chain over the prior year.

“This represents a rise in disruptions compared to the results of surveys conducted in 2020 and 2021,” Hubs reports. Specific to the electronics sector, the company says that the Russia-Ukraine conflict disrupted the global supply of semiconductor-grade Neon, a crucial inert gas essential in chip production. Ukraine supplies about half the world’s supply of Neon gas, which means electronics companies still face difficulties in obtaining that gas. “Additionally, the hostilities between Russia and the international community have disrupted the supply of rare metals, leading to reduced manufacturing output for companies such as Apple,” Hubs adds.

These are just some of the current issues impacting supply chains and driving a need for better resilience. “The COVID-19 pandemic showed us how fragile global trade networks and supply chains were in 2020, causing massive disruptions and shortages across various industries as cities locked down and the supply of labor was dramatically impacted,” says Hubs, which found that 30% of manufacturers surveyed have yet to take any steps in the direction of greater supply chain resilience.

“As the complexity of supply chains continues to grow and the number of unforeseeable disruptions increases, it is essential for businesses to develop a risk management strategy to address future disruptions,” Hubs says in its report. “Unfortunately, despite facing significant supply chain disruptions in recent years, many organizations remain unprepared for future risks.”

4 Ways to Improve Supply Chain Resilience

Hubs offers manufacturers this guidance for building more resilient supply chains:

1) Use more automation. Hubs says automation can improve supply chains by increasing productivity and efficiency. These processes can mitigate the effects of certain supply chain risks, particularly those related to labor shortages and lockdowns. “Automation is particularly advantageous for its ability to speed up processes that can slow down supply chains if done manually,” it adds.

2) Build reserve inventory. “Though it goes against lean manufacturing strategies, building a reserve inventory can improve supply chain resilience,” Hubs points out. Having inventory in reserves creates a “buffer.” That way, when a link in the supply chain fails, there’s always enough inventory to keep operations running while that link is reestablished or replaced.

3) Use geographically-diverse sources. Don’t put all your eggs in one sourcing basket. “With a strong, distributed network of suppliers or potential suppliers, supply chains can adapt in the face of regional disruptions and changing geopolitics,” Hubs says. “If one geographic region goes down, suppliers in another can step up and fill the gap.” 

4) Keep close tabs on your supply chain. Monitoring your supply chain from the raw materials to the finished product can be a complex and lengthy process. This may explain why just 11.6% of Hubs’ survey respondents said “monitoring of supply chains” was an effective measure to reduce the effects of supply disruptions. “Thankfully, specialized software tools have simplified the supply chain monitoring process,” Hubs adds. “Additionally, companies are exploring emerging technologies such as artificial intelligence (AI) and machine learning for supply chain optimization.”

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