To say the last few years were “tumultuous” for businesses worldwide would be an understatement. From the global pandemic to Russia’s invasion of the Ukraine to the ship blocking the Suez Canal, there was seemingly no end to the number of disruptive events emerging day-to-day. Add high rates of inflation, rising interest rates and higher costs of doing business to the equation, and companies are now operating in a world that looks a lot different than it did just five years ago.
The good news in all of this is that life is all about learning from mistakes, absorbing those lessons and then using that newfound knowledge to avoid similar problems in the future. The catch-all phrase that many companies are using to describe this “awakening” is supply chain resilience, or the ability to face head-on—and then quickly recover from—major problems as they arise.
“Having a resilient supply chain is important because it helps companies ensure their business processes stay up and running, increase customer loyalty and maintain competitiveness by ensuring that products and services are delivered on time and reliably,” Forto Logistics points out in “Supply Chain Resilience: 3 Lessons the Past 3 Years Taught Us.” “In short: Supply chain resilience is a guarantee of business continuity and success.”
Five Key Lessons Learned
Here are five lessons that all organizations can carry forward with them as they manage today’s challenges and plan for future success:
1. Supply chain diversification is important. One of the most important lessons that the past year has taught us is the importance of supply chain diversification. “When COVID-19 first hit, many businesses were taken by surprise. Sudden shutdowns of factories and other production facilities in China caused widespread shortages of goods and materials,” Forto says. Many businesses were forced to scramble to find new suppliers on short notice. The lesson here is clear: Having a diverse and geographically dispersed supply chain can help to mitigate the risk of disruptions. “By diversifying your supply chain with both alternative transport options and suppliers, you can make your business more resilient,” Forto adds.
2. Don't try to learn on the fly. Over the last few years, many organizations were “learning on the fly” and some were in a perpetual state of denial. That’s changed and companies now realize the value of good preparation and planning. Luke LeSaffre, chief revenue officer at global electronic component distributor Fusion Worldwide, encourages companies to maintain this level of vigilance even if the business environment begins to “normalize” at some point. “It's very easy to forget what happened and think that the worst is behind us,” says LeSaffre. “A better approach is to come to terms with the fact that the next wave is probably not too far off, because it's more likely to happen sooner rather than later. That’s a healthy approach because it’s much always better to be pleasantly surprised than disappointed.”
3. Perform frequent vulnerability assessments. This isn’t the time to be “reactive” and hope that you can solve problems as they emerge. Business leaders must know their strengths and weaknesses to determine how a disruption will affect their operations. Conduct regular vulnerability assessments in each step of the supply chain, from warehouses to vendors to delivery routes. “A quarterly assessment is the standard operating procedure for most industries, but some companies do it monthly or biweekly,” BOSS Magazine advises. For example, a vulnerability assessment is probably in order if you’ve changed suppliers, if material costs change or if a new risk emerges. “Tracking all of these changes can be difficult. Supplier mapping is a simple way for companies to uncover their blind spots, get more insights and make more accurate vulnerability assessments,” the publication adds. “Every business should have a comprehensive outline of every location on their supply chain.”
4. Technology is your friend. Technology can connect supply chains and give organizations real-time visibility to see, understand and take action on issues. Citing a recent Deloitte survey, Worldwide Logistics Group’s Joe Monaghan says just 13% of organizations can map their entire supply chain network. “Emerging digital tools like digital freight matching are becoming more widely available. Tracking packages should become more accurate, too, with the ability to pick up weather delays and traffic patterns,” Monaghan writes in Forbes. “More organizations will have access to data analytics to gain detailed insights and make more informed decisions, while smart contracts and blockchain technology can help drive greater transparency.”
5. You have to build resiliency into your game plan. For many electronics buyers, resiliency is all about having alternative options that can be called upon when primary supply chains break down or when they can’t deliver. This is one of the hardest lessons learned over the last few years, when procurement departments scrambled to find new sources of chips, electronic components and other products. It’s a gap often best filled by an authorized distributor that has access to multiple sources of supply. “It's increasingly important for buyers of electronics—or, for the manufacturers of end products—to have an independent distributor layer in their supply chains,” says LeSaffre.
