22 Sep 2023

Defining Supply Chain Resilience and How to Measure it?

A seasoned business operation needs a supply chain for all weather. But what exactly consists of building a resilient supply chain, and how exactly do you measure its performance? Read this exciting piece to know more.

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Can a business have a soothsayer in its ranks? One that informs us of the next significant disruption. Something that gives all the telltale signs that precaution might come in handy than the cure.

While strong manifestation might come to fruition in an idealistic scenario, in reality, an action plan needs proper planning on the back of vetted data to have a robust running business. Come to think of it, leadership can have the next best thing, which is supply chain resilience.

To know what precisely these magical three words mean, let’s start with the definition.

Table of Contents

What is Supply Chain Resilience?

A business faces many seen and unseen disruptions. Some originating from known factors, some finding its inception beyond human accountability (read: natural disasters, epidemic). During such challenges, an organization’s value chain resilience shines through, which helps it navigate the bottlenecks and react to the matters at hand faster. This all happens without any significant impact on the operations and production timelines.

The benefits of a resilient supply chain translate into an enterprise's firewall tactics and aid it in recovery. This includes proactive planning and anticipating the possible market opportunities that might turn up. An SCM that actively invests in resiliency & foresightedness builds itself to the ranks of modern supply chain supremacy. And to achieve such a distinct virtue, one needs to know what builds a resilient supply chain.

How to build a resilient supply chain?

There can be many routes to building a resilient supply chain. Every one of these routes works on the basic principles of transparency, collaboration, data sharing, and more. In addition, a SCM needs to constantly update its current processes and practices to be more adaptable. It becomes imperative for a leadership team to be on a constant lookout for the latest tech that helps the entire value chain process evolve with time, market requirements, and user experience. Below are pointers on what constitutes designing a resilient supply chain.

Building the Resilient Supply Chain
  1. Visibility Siloed processes always result in delayed decisions, eventually costing the organization financial hiccups. Setting a foundation with visibility helps stakeholders know the process from inventory to last-mile delivery. Such transparency also leads to increased customer satisfaction. Visibility initiates real-time knowledge sharing that drives faster turnaround time in case of disruptions and ensures smooth workflow for the entire supply chain.
  2. Collaboration A supply chain is teamwork. Management hires experienced heads to get complete accountability for the value chain processes involved. More importantly, navigating a bottleneck under supply chain duress needs smooth channels where confidence in decision-making is the first & foremost requirement. With collaboration, timely decisions can benefit faster response, eradicating adverse outcomes.
  3. Data Transparency Data sets the backbone for every process. If the data is vetted, then it helps leadership set crucial KPIs that transform into eventual action plans. Such data transparency also enables continuous monitoring & evaluation of the framework deployed. Not to mention, from the holistic development objectives of an organization (i.e., sustainability), data can churn out necessary insights.
  4. Diverse Sourcing Plan Organizations with diversified suppliers across the demography have a better ecosystem that can accommodate flexibility in the face of disruptions and scalability in times of relevant market opportunities. This bolsters the efficiency of a value chain that always fares well with customer expectations by being an all-season mechanism powered by reliable suppliers.
  5. Modernization of Process While it may be a slow road from traditional to modern supply chain practices, it pays off through faster processes, a centralized database, quick reaction to challenges, and better coordination of internal activities. In the age of relevant technologies nullifying severe delays in the framework, upgrading infrastructure is the way to go.

How to measure supply chain resiliency?

Once the pillars of supply chain resiliency are defined, the next step is to measure the effectiveness of the entire process. And to gauge the final result, three core metrics are laid out.

  1. Contingency Plan Resiliency response often comes in the face of questions laid down by disruptions. This effectively keeps a business running by cutting a few corners, majorly focused on the financial front. This step involves an organization keeping away from its usual production calls and testing its grit in the face of bottlenecks and uncertainties. A resilient framework efficacy shines through for how long it can incubate a supply chain from a market's ill effect.
  2. Recovery Post a contingency plan, a leadership sits out to ideate on getting back the lost business that might have impacted the eventual revenue goals. The shorter the recovery time, the better the company's chance to resume its normal proceedings at full tilt.
  3. Performance Post Contingency While a contingency plan and recovery go one after the other, the gradual performance of a supply chain gets identified with pre-disruption and post-disruption timelines. The impact of an unprecedented event (read: natural disasters or a pandemic) results in changing decisive factors like user consumption behavior, economic conditioning, and more. Such indicators help define the gradual functioning of the supply chain, training it to be more astute and responsible in the face of untimely occurrences.

Enterprises with a resilient supply chain framework have an edge in navigating turbulent market scenarios. This also contributes to adapting strategies in accordance with the need. Investment in a flexible value chain is of utmost importance, considering customer gratification in the era of competition being short-lived and another disruption just around the corner. Connect with the team at 3SC to know how we can help you sideline potential loss of business in the face of a supply chain anomaly.

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