How to Develop a Resilient Supply Chain

Evidence shows that re-evaluating your supply chain with resiliency as one of the key inputs will provide an incredible return on investment (ROI) in the long term. Below are two reasons (amongst many) to consider:

Strategy & Execution

By defining resiliency’s role in your supply chain and then being able to tally and weigh the costs and benefits into your plan, you can assure yourself the best chance to sustain your company’s strategy, even during challenging times. The global pandemic created many examples of this. Probably, one of the most well-documented is the chip shortage and the crunch it had on many automakers' production output. While all automakers were impacted, Toyota, by many accounts, was able to navigate the shortage more effectively with less widespread impact. The reason: they had suffered greatly and learned from the Fukushima disaster in 2011. Following this disaster, they re-designed their supply chain and took a more proactive role with their supply base. Toyota invested in a just-in-case strategy by stockpiling chip inventories depending on their complete supply lead time. 

Competitive Advantage 

Opportunity is abundant during disruption. And, according to a McKinsey executive survey, 42% of respondents felt the COVID crisis had weakened their company’s competitive position. However, more importantly, 28% of respondents reported that the crisis actually increased their competitive edge. McKinsey found this was given in part through their supply chain resiliency in making adjustments to the supply chain to manage risk before the crisis. 

So, where do you start on this journey? As with any major undertaking, a funnel-down approach starting with high-level items and then zooming into the worthiest details can help in focusing and prioritizing resources. To get the process started, you can simply begin to think through and document the areas where your supply chain is (or has been) exposed, given its characteristics.

As you start this process and begin to flesh out your own focus areas, we would encourage you to incorporate other stakeholders and functions. They will be able to help bring nuanced perspectives and brainstorm on the areas that should be prioritized for deeper examinations using more formalized frameworks.

Interested in learning more? Read the full article.

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