The past two decades have been turbulent for the global supply chain as political, climate and social disruptions continue to pose significant challenges. Most recently, of course, we’ve been contending with the COVID-19 disruption. This was followed by container shortages that resulted in empty shelves at grocery stores, micro-chip shortages that caused a back-log in available cars.
In March of 2020 the largest global companies and their suppliers had more than 12,000 factories, warehouses, and other facilities in COVID-19 quarantined areas.1 The stark lessons of early 2020 underscore an urgent need for resilient supply chains.
Even after global or regional cases of COVID-19 decline, experts believe it might take years for supply chains to fully recover. This means supply chain leaders should be focusing on long-term resiliency.
What is Supply Chain Resiliency?
Resilience is more than a supply chain’s ability to avoid or mitigate the impact of disruptive events; it’s also the ability to recover quickly. Strategic planning needs to understand a wide range of external and internal risks and their possible impacts.
Conventional wisdom tell us that a supply chain is only as strong as its weakest link. This means the resilience strategy must extend beyond an organization’s self‐assessment to include the strengths and weaknesses of its suppliers and partners from raw materials to end consumers.
This fulsome view of the supply chain also identifies opportunities for continuous improvement programs that enable faster pivots for processes and policies as conditions change.
A resilient supply chain creates competitive advantages by ensuring you can offset the impacts of natural disasters, trade disputes, labour actions, and social unrest, along with emerging risks such as counterfeit goods.
Strategic vs. Reactive: Recognizing the Need for Resiliency
As the need for resilient supply chains becomes more prevalent, executives are starting to recognize the important role resilience plays. By next year, almost half (47 per cent) of industry leaders will view supply chain resilience to external disruptions as a strategic priority, which is more than double the number in 2018 (22 per cent).2 Given recent events, that cohort is likely a lot larger.
Despite this attention to strategic supply chain planning and management, many organizations are stuck in a reactive mindset, where the focus is on cutting costs and squeezing out additional efficiencies. This stance limits growth, and increases vulnerability when it comes to disruptive events – the opposite of a resilient supply chain.
When supply chain teams have a seat at the strategic planning table they can get out of cost-reduction mode and start proactively finding ways to manage risk, mitigate impacts, facilitate recovery and design resiliency into every process and partnership.
Lack of integration and visibility creates vulnerability
Organizations with mature, integrated, data-driven supply chains use real time, collaborative planning tools and continuous innovation to design the competitive resilience they need. Yet only 16% of organizations have these sophisticated systems.1 This lack of customer insight makes it difficult to reach markets quickly and ensure a pipeline of innovative new products.
There are many reasons for this connectivity gap: half of organizations surveyed say it’s too expensive, while nearly a quarter (23%) struggle with the business case and 21% can’t find the right partners.1 For
organizations that are able to move past these and other barriers, the competitive opportunities are abundant.
By focusing on resilience, you can set up your organization to weather external and internal disruptions while increasing transparency and evidence-based continuous improvement practices.
Why Invest in a Resilient Supply Chain?
If you’re trying to build the business case for a more strategic supply chain management practice, consider that an analysis by Bain shows that companies with resilient supply chains grow faster because they can move rapidly to meet customers’ needs when market demands shift. The analysis also shows that a resilient supply chain increases perfect order rates as much as 40 per cent and increases customer satisfaction by as up to 30 per cent.
The Competitive Advantage of Intelligence and Resilience
- Profitability: Data around costs, margins and risk offer prescriptive insights for your bottom line.
- Market Share: Supply chain innovation can optimize your pipeline of new products for first mover
advantage. - Customer Satisfaction: An intelligent supply chain is better able to anticipate and meet the changing pre- and post-sale demands of your empowered consumers.
- Canadian Presence: As cross-border shopping wanes, organizations that need to reach Canadian customers will need partners with the market insights and experience to help them compete.
The world has become too uncertain and too hyper-competitive to leave ever more crucial supply chains unready to combat the vicissitudes of volatile markets, turbulent politics, and natural disasters. Intelligent, resilient supply chain design that incorporates data in real time, end-to-end visibility and lifecycle tracking not only buffers business against coming storms but builds in the strength to
confidently steer your competitive destiny.
The hallmarks of a resilient supply chain include:
- Transparency so risks can be identified easily
- Ongoing risk analysis for real-time adjustments
- The nimbleness to avoid or reduce the impact of external factors
- Quick recovery from disruptions
- Gathering and analyzing disruption data to inform decisions
- Leveraging changing conditions to improve performance or processes
Choosing a 3PL Partner:
The right 3PL partner plays a significant role in building a resilient supply chain that creates competitive advantages. Beyond cost effectiveness and improved efficiency, your trusted partner should also provide
strategies and services for end-to-end visibility, the expertise needed to open new markets and the presence to achieve customer service excellence.
Here are a few questions you should be asking your 3PL partners:
- What are their capabilities across the product lifecycle? Can they handle reverse logistics and post-sales service?
- Will they improve customer loyalty with forward stocking, outsourced technical services and parts inventory management?
- Do they have broad e-commerce and omnichannel retail experience and best-in-class fulfillment capabilities, such as custom subscription boxes?
- Can they design responsive supply chains for specialized needs in industries such as healthcare or technology?
- Are they digital leaders with mature technology to provide real-time insights around inventory, cost, customer experience and compliance?
- What value-added services can they offer, such as kitting and packaging or custom labelling?
- Do they have best-of-breed metrics around on-time delivery, dock-to-stock, fill rate and order accuracy?
- Do they keep service levels consistent while managing inventory across the country, including vendor managed inventory (VMI)?
- Can they reach Canadian customers from coast to coast to coast?
1. Tom Linton, Bindiya Vakil, Coronavirus Is Proving We Need More Resilient Supply Chains, Harvard Business Review, March 20, 2020
2. Simon Ellis, Jeffrey Hojlo, Leveraging an Intelligent Digital Supply Chain, IDC, March 2019
