The Census happens once a decade, and 10-year high school reunions are still a thing, but supply chain disruptions? These “once-a-decade” events are now so frequent the question has morphed from Will a disruption occur? to some version of How prepared can you be?
Today’s environment is filled with everything from severe weather to geopolitical uncertainty. Because of that, teams have learned to embrace the fact that disruption’s just part of doing business. So, what makes a supply chain strong enough to handle whatever’s coming next?
They build resilience, they search for visibility, and they find partners to help them keep operating when “the norm” disappears. Here are five common traits we see from organizations that handle disruptions well.
1. Know the risks
You can't be ready for a risk you haven't identified. That’s why resilient organizations take time to understand the vulnerabilities within their operations and supply networks. They look beyond immediate suppliers and think about:
- Geographic concentration
- Transportation dependencies
- Inventory constraints
- Potential single points of failure
Then, they document the risks and develop plans to address them before a disruption occurs.
2. Build flexibility into the system
For a lot of teams, supply chain disruptions turn into major problems because they don’t have acceptable alternatives. They didn’t create the flexibility that’s needed to roll with the punches.
Resilient supply chains have three things: 1) alternate suppliers, 2) multiple sourcing options, and 3) pre-approved substitute products. That way, when a preferred item suddenly becomes unavailable, you can continue to operate. By evaluating and approving the alternatives ahead of time, you don’t have to rush anything through.
Your goal is to build in continuity. Planning ahead is how you make it possible.
3. Invest in visibility
Not all supply chain challenges are caused by global events. In fact, some of the biggest problems often come from within an organization.
Without visibility into what inventory is available, where it's located, and how quickly it's being consumed, shortages can occur even when products are technically in stock. But it doesn’t have to be that way.
It used to by tedious and/or painful to get accurate usage data. Today, things are different. A good inventory management system can help you identify issues early. Then, you can make informed decisions based on data before small problems become large ones.
Simply put, you can't respond quickly if you can't see what's happening.
4. Diversify your supply base
To me, this one’s obvious, but reliance on a single supplier, region, or transportation route creates risk you don’t need.
The value of supplier diversification has always been important, but COVID really demonstrated what happens when that is not the case. By sourcing products from multiple suppliers and/or geographic regions, you reduce the likelihood that a disruption can stop your operation.
To be clear, diversification IS NOT about replacing trusted suppliers. Instead, think of it as a way to give yourself options whenever the next unexpected challenge arises.
5. Communicate … relentlessly
Unsurprisingly, communication is really important. Without it, even the best contingency plans fail. The most resilient organizations communicate before, during, and after a disruption. (Sadly, I’ve also seen teams skip the “after” stage and pay for it.)
The best teams establish what people can expect for communications and they keep decision-makers informed. This is especially important during a disruption when internal departments and external partners need to be on the same page.
After things return to ‘normal’ (or as close to normal as possible), you need to do a debrief. You’ll want to evaluate what worked, what didn't, and how teams could improve their responses. Shift your mindset to see that every disruption is a learning opportunity.
Two final truths
Perhaps the most important piece in all this is that supply chain resilience isn't created by a single department. Procurement, operations, suppliers, logistics. Everyone has a role to play.
Truth #1: Resilience doesn’t have a finish line. You’ll never be “done.” It's an ongoing process where you plan, adapt, communicate, and improve. Then, repeat.
Truth #2: Disruptions will continue to happen. But with the right preparation and partnerships, they don't have to derail you.
Want to better understand your supply chain vulnerabilities? Start by identifying a single point of failure in your operation and work with your supply chain partners to develop a documented backup plan before you need it. Start small and scale as needed. If you focus on progress vs perfection, your supply chain will be more resilient each day than the day before.