Organisational Resilience. How Resilient Is Your Supply Chain?
Disruptions in the last few decades, such as the global recession and the COVID-19 pandemic, have shown the importance of building organisational resilience right from the supply chain.
Like a house of cards, an entire supply chain is left vulnerable if one element is exposed. So, in such harsh climates, firms that didn’t fortify their supply chains suffered the most setbacks.
Supply chain resilience measures a company’s ability and capacity to handle unforeseen supply network disruptions. A resilient supply chain would mean an organisation can respond and recover from any issues without derailing operations or deadlines.
Why is it crucial to have a resilient supply chain?
According to the recent Resilience Report from BCI, they highlight:
- Supply chain disruptions had a great financial impact, with over 16% of organisations reporting severe revenue loss.
- More than 10% of organisations noted that supply chain disruptions negatively affected their brand reputation.
- About 10% of organisations lost regular customers after bad experiences caused by supply chain disruptions.
In spite of all this, over 70% of organisations still don’t have appropriate plans to handle prolonged supply chain disruptions, according to a report by Accenture.
4 Key Characteristics of a Resilient Supply Chain
A resilient supply chain in any industry or geographical location ideally consists of four key elements:
1. End-to-End Monitoring
To develop a resilient supply chain, you must continuously monitor it. However, many organisations today are unaware of what is happening with customers and vendors at different levels within the supply chain.
It is important to closely monitor critical vendors and identify issues before they become serious incidents. These could include cyber breaches into your network, delayed materials or shipment delays to your customers. Knowing about the issues as they arise allows you to implement other options and keep your customers updated.
2. Sourcing Diversification
Many companies still rely on single vendors or regions in their supply chains, which can be dangerous. Experts recommend using a mix of near-shore or off-shore vendors, especially for key components. That way, if one runs into problems, you have suppliers from other locations who can step in.
5. Incident Tolerance
To ensure operations continue even when vendors experience disruptions, you need to strengthen your compliance postures, security, and backup. In doing this, you aim to build tolerance within the supply chain to ensure it can run even when unexpected incidents occur.
Most successful and resilient organisations embrace an agile mentality, staying attuned to market trends and the latest technological advancements. That enables them to stay ahead of potential attackers.
These organisations leverage industry-leading tools and strategies to gain insights, anticipate both opportunities and risks and proactively outpace their rivals.
The Critical Factors for Building Resilient Supply Chains
For a supply chain resilience strategy to be effective, people, processes and technology need to take centre stage and work in sync.
For a resilient supply chain, you will need to assemble a crisis management team comprising highly skilled, agile and resilient-mined people.
Your employees are only as efficient as the systems available to support them. Using IT systems to streamline process injects high levels of efficiency. This allows the organisation to access information in real-time, which it can then use to make decisions on the supply chain. Staff will be well-informed to navigate any crisis that may occur.
Using appropriate technologies to build a centralised incident management system remains the best way to identify issues within the supply chain and maintain accountability. Such technologies are excellent for fine-tuning processes within the organisation.
Supply chain resilience is key for organisational success. Yet, it takes time, effort and loads of expertise, which you may not even have in-house. That is why working with specialists to manage resilience can make all the difference. It allows you to focus on running your organisation without the worry and risk of frequent supply chain disruptions.
To learn more about organisational resilience, download “The Ultimate Guide to Organisational Resilience” here.