5 Capabilities to Create Resilient Supply Chains

05/19/20

Per Bain & Company global consultants, leaders invest in five capabilities summarized below to create resilient supply chains:

1. Network agility. Reacting quickly to disruption requires a flexible ecosystem of suppliers and partners that can handle sudden shortfalls or even produce new products. That means setting up alternative manufacturing sites and assembly nodes and making the most of Industry 4.0 tools to optimize cost, improve visibility across the network and accelerate reaction times. Leaders develop tailored solutions for each segment of their supply chains to boost performance and cut costs. Those dependent on offshore production move some manufacturing onshore or closer to their core markets. Toyota reduces risk by having one supplier produce 60% of the needed parts, and two additional suppliers each produce 20%.
2. Digital collaboration. Cloud-based supply chain applications and collaborative platforms and tools enhance information sharing. They also improve the quality and speed of decision making within an organization and with suppliers and other external partners in a secure environment. Amid the Covid-19 pandemic, manufacturers have demanded greater visibility into the supply chains of their suppliers—a practice worth continuing. Leaders are applying automation and robotics to make their supply chain more autonomous and adding suppliers in their home markets to ensure business continuity.
3. Real-time network visibility. Control tower solutions that integrate data across the entire supply chain, 5G technology and blockchain offer leadership teams real-time visibility. Companies can better calibrate supply with forecast demand by comparing internal production capacity data with real-time demand signals such as weather data.
4. Rapid generation of insights. Leadership teams can stay a step ahead of supply chain disruptions by improving their ability to rapidly analyze internal data and external sources of big data. That means harnessing machine learning and artificial intelligence for predictive and prescriptive analytics. Those tools can deploy early-warning technologies, model risk scenarios and develop preprogrammed responses. Increased risk of disruption also requires updated planning parameters and objectives, since old assumptions are no longer valid.
5. Empowered teams. Decentralized teams can react quickly to insights generated by advanced analytics and create the rapid-recovery capabilities that will help companies navigate smoothly in times of disruption.

Bain & Company goes on to share that the Covid-19 outbreak has exposed just how vulnerable far-flung supply chains have become. We agree with them that companies that begin investing today in a resilient supply chain will be best positioned to weather the next event that obstructs the global flow of goods.

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