Building resilient supply chains requires businesses to identify and prioritize risks, then develop strategies and technology to mitigate them. Common examples include diversifying suppliers, simulating disruptions and adding redundancies so operations can continue without significant delays or losses.
Resilient supply chains provide customers with reliable deliveries while simultaneously cutting costs and improving efficiency, so retail business leaders must follow these best practices for creating one.
1. Invest in Technology
Supply chain success requires adapting to unexpected events quickly. Doing so allows companies to protect against financial losses, retain customer satisfaction and preserve their brand while simultaneously keeping operational costs low, optimizing operations and mitigating risks.
Building resilient supply chains involves more than simply creating backup plans or contingency plans; it requires altering mindsets and shifting focus away from efficiency towards resilience, with significant investments made into redundancy that may increase costs.
An organization can increase resilience by creating capacity and inventory buffers to quickly respond to any disruption, though this approach may be expensive. Though costly, such preparation can mitigate losses caused by unanticipated events while improving operational continuity. Furthermore, companies can conduct “what-if” scenarios that identify and prioritize vulnerable parts of their supply chains for faster response during times of uncertainty.
3. Invest in Flexibility
Supply chains need flexibility to thrive in an unpredictable business environment. This involves adopting strategies such as diversifying suppliers and developing backup plans, as well as investing in technology for visibility and agility.
Supply chain managers traditionally focus on maintaining minimal capacity and inventory buffers to reduce costs, yet such practices can often prove disastrous in an event of disruption; recent port congestion has resulted in rising ocean freight rates as well as severe container shortages.
By adopting supply chain management (SCM) solutions that offer total visibility and collaborative process planning, businesses can increase flexibility and resilience in their logistics operations, fulfilling orders without delays to enhance customer satisfaction and retention and reduce risks such as lost sales or dissatisfied customers. Incorporating agile SCM solutions also enables organizations to reduce supply chain costs through more efficient processes and less waste; investing in these capabilities helps organizations see supply chains not as cost centers but as drivers for business success.
4. Create a Culture of Resilience
Businesses that construct resilience into their supply chains are better prepared to quickly react to unexpected business disruptions. This includes investing in redundancy, flexibility and cultural transformation measures.
Companies with resilient cultures foster adaptable leadership, healthy relationships and an appetite for experimentation with new ideas. Employees are encouraged to take risks without fear of punishment or embarrassment and learn from failure in an atmosphere free from punishment or embarrassment; silos can be broken down, creating temporary “tiger teams” capable of taking on tough projects.
Leaders seeking to foster resilient cultures must adjust the way they think about risk and uncertainty, viewing sudden business challenges not as opportunities to make lasting, substantial changes, but as challenges to be embraced as opportunities. Furthermore, leaders must focus on developing culture capabilities within resilience MI in order to identify areas where further enhancement can be made and track/report on them over time.