Supply chain resilience
What is supply chain resilience?
Supply chain resilience refers to the ability of a supply chain to withstand and recover from disruptions while maintaining continuous operations and delivering products or services to customers without significant impact. It involves the capacity to anticipate, adapt, and respond effectively to various challenges, including natural disasters, geopolitical events, market fluctuations, and supplier disruptions.
How to build a resilient supply chain
To build a resilient supply chain, organizations can take several proactive measures, including:
Diversify suppliers: Establish relationships with multiple suppliers to reduce dependency on a single source and mitigate the risk of disruptions.
Enhance visibility: Implement technologies and systems that provide real-time supply chain visibility, enabling quick detection and response to disruptions.
Risk assessment: Conduct comprehensive risk assessments to identify vulnerabilities and develop mitigation strategies for potential threats.
Collaboration: Foster collaboration and communication among supply chain partners to facilitate information sharing and coordinated response during disruptions.
How to measure supply chain resilience
Supply chain resilience can be measured using key performance indicators (KPIs) such as:
Time to recovery: Measure the time taken to recover operations after a disruption.
Inventory turns: Evaluate the efficiency of inventory management in adapting to changes and disruptions.
Customer satisfaction: Assess customer satisfaction levels during and after disruptions to gauge the impact on service levels.
Supply chain resilience examples
The increasingly disrupted nature of global supply chains provide a multitude of examples of supply chain resilience in practice.
Toyota, for example, recovered quickly from the 2011 earthquake and tsunami in Japan by leveraging diversified suppliers and flexible production processes.
During the COVID-19 pandemic, Coca-Cola adapted its supply chain by prioritizing essential products, collaborating with partners to ensure continuity, and leveraging data analytics to optimize operations, demonstrating resilience in the face of unprecedented challenges.
Why supply chain resilience is so important
The COVID-19 pandemic and Red Sea crisis underpin the importance of having an agile and resilient supply chain. Developing and measuring supply chain resilience is crucial for organizations to adapt and thrive in today's volatile and uncertain business environment. By investing in resilience strategies and capabilities, businesses can minimize the impact of disruptions and maintain a competitive edge.