5 Ways to Build Agile, Resilient and Sustainable Supply Chains
Supply chain management is a critical part of an organization. This is a fact that need not be overemphasized. If anything, global geopolitical issues have made organizations relook at their operations and supply chain in particular. To cushion themselves against such disruptions, more organizations are in a race to build agile, resilient and sustainable supply chains.
But the supply chain is not quite easy to manage, on the flip side it is fairly complex depending on the size of the organization, the length of the operations chain as well as the number of processes and amount of inputs that are needed to ensure a product is ready and gets to the customer in the required time. This is the whole chain from the receipt of raw materials to the eventual distribution to reach the end customer.
The chain often involves incoming goods, order picking, stock replenishment, equipment maintenance, inventory control, returns, sequencing, shipping and other processes. The supply chain has some major standard processes across all organizations with minor variations differentiating the organizational approaches to handling their supply chain management.
The strength of a supply chain, then, can be measured by its agility and resilience – the ability to react to a disruption, resist its effects and mitigate the impacts. This means that the reaction time of agile supply chains is short and recovery from distress is quick because the agile and resilient strategy aims to buffer the system.
So how can organizations build such agile, resilient and sustainable supply chains?
1. Try forecasting the variations in consumer demand
Shifts in consumer demand happen all the time and this has an impact on the efficiency of the supply chains. Utilizing industry 4.0 technologies such as big data, organizations can use forecast graphs built from the organizational knowledge built over time to try and understand any interdependencies that can be exploited to forecast and predict any future variations in consumer demand. Third parties can also be used as well to provide any relevant data which can be useful towards achieving the goal.
Exploiting interoperability, the data can be shared across the various parts of the supply chain and the organization in general. This can be achieved by developing visuals which can be easily interpreted and understood by all people so that everyone can make the best use of the data.
2. Predict Associated Operational and Inventory Costs
Managing operating costs is one of the key aims of most companies. It may not be surprising that reducing operational costs and maximizing customer value could be the number one goal for majority of the businesses. The obvious fact is that costs affect the profits. Yet predicting costs is not an obvious thing for many organizations because of the complexities that come with collecting, understanding and managing cost data.
The good thing though is that there are products in the market that can help organizations track, analyze and manage their costs fairly easily. And thus costs associated with material and storage can be predicted for instance. Storage and Inventory costs should be managed well to avoid hampering capital flows. At the end of the day, it is about developing a situation where there is the ability and means to respond to variations in the chain and mitigate them. That is, mastering the understanding of the organization’s decoupling point.
3. Quick Adaptation to Changes in Compliance and Standards
Having been involved in standards development, I can attest that new regulations and compliance standards are being churned out regularly. Only agile and resilient supply chains can be able to foresee potential changes in litigation and be able to respond in time.
Compliance is sometimes local, regional or global. Information sharing among the different players in the supply chain can help in a quick response time. Suppliers of raw materials and manufacturers, locally or at international levels, can share information so that companies can be able to predict the potential impact of any changes in regulation on product quality, operational efficiencies or shipping times for example.
4. Develop Capability to Identify and Counter Counterfeit
Counterfeiting hugely affects supply chains. Counterfeits and fraud is a huge business today and one that is sophisticated because of its normalized nature. Organizations have to be a little more clever to identify formalized menace and act accordingly.
Instead of beginning at the stand-alone and discrete cases, organizations need to invest in detection technologies using fraud analytic tools which can identify such things as stolen identities and hijacked and stolen devices among other stints used by fraudsters to chunk out an organization’s resources through supply chain disruptions.
5. Work Towards Developing Steady Supply Networks
To build strong, agile as well as sustainable supply chains, stability is important. This can be achieved by reducing the number of steps in the supply chain. A longer supply chain increases chances of instability which in turn reduces the agility of the system and the chain cannot be described as resilient because recovery from multiple failures can be a daunting task.
Another way to create steadiness in the supply chain is to master the processes in the manufacturing chain. For example, it could mean deeply understanding all the raw materials needed for the products and ensuring there are dependable suppliers. This translates to as little disruption as possible since proper communication and information sharing with the supplier can enhance preparedness for any possible future delays by planning.
For organizations keen on improving efficiency, streaming their operations and increasing customer value, satisfaction and trust, agile and resilient systems are not an option but rather a necessity. Using the above approaches together with the relevant technologies can go a long way in building stronger and sustainable supply chains.
