Supply Chain Resilience: three practical solutions
Summary
The need for supply chain resilience has come to the fore during Covid-19, particularly with the difficulties of securing PPE, food, medicines and ventilators at the outset of the pandemic and have therefore become more of a focus for both government industrial policy and business resilience, with the efforts to secure vaccine supply in particular becoming a matter of national and international debate.
Managing supply chains has never been easy due to their complex nature, and however good your existing systems, supply chain disruptions, such as those we’ve seen around Brexit and Covid-19, present unavoidable risks which need to be prepared for, mitigated, and acted on rapidly.
To help you do this, this report builds on best practice from the Covid-19 pandemic to offer three practical steps to prepare your business for volatile, uncertain, complex and ambiguous market situations.
- Adopt a risk management mindset by identifying supply chain vulnerabilities and accelerating fixes.
First, understand the vulnerabilities in your supply chain, from packaging supply to delivery speeds, then accelerate the decision-making process to deliver faster fixes, whether by preparing alternative sources in advance, or better monitoring to understand emerging pinch-points.
- Use Demand profiling to prepare your supply chain for market variability.
Designing your supply chain for late conversion ensures that decisions to make specific goods are made as close to demand signals as possible. This will require investment in sufficient spare fixed asset capacity to ensure your supply chain can cater for demand uncertainty. Properly understanding the demand profile of your product allows a segmentation approach to implement an appropriate replenishment process.
3. Adopt flexible contracting to enable greater collaboration.
Demands will fluctuate and change across the life of any contract. A contract must be able to deal with and respond to that change. This can be achieved by adopting behavioural contracts, which focus on outcomes and constantly update the needed outcomes in line with the operational needs of the business. Should any disputes arise, the contract terms will help resolve the disputes promptly rather than delaying vital action.
Effective resilience across the supply chain enables each business within it to benefit from balanced demand and supply and swift, even flows (of cash, information and material).