April 5, 2022 Strategies to Strengthen the Supply Chain

In times of heightened risk and uncertainty it’s vital to safeguard the supply chain. Timely actions can gear better performance.

The current global business, economic and security climate – compounding the disruptions caused by COVID-19 – is fraught with uncertainty. Whether the company’s primary exposure is to commodities’ prices linked to the war in the Ukraine, or rare metals availability associated with China’s trade policies – or any of the other myriad global risks now unfolding – manufacturing company leaders and CSCOs should be re-evaluating the resilience of their supply chains.

Questions to ask include ‘Where are the vulnerable points in the value network?’, ‘What are the consequences of disruption in key operational areas?’, and ‘What is the cost-benefit projection to add resilience, in alignment with company strategy?’ Six areas of strategic focus can assist in achieving both greater resilience and an improvement in supply chain delivery:

Secure quick wins.

Possibly, weaknesses have already been identified. Shore up these areas first.

Reassess the supplier base. Can risks be reduced by using a broader spread of suppliers? Could costs be trimmed by partnering at greater scale with those suppliers deemed most valuable? Can longer-term contracts be locked into secure raw material supplies?

It is also opportune to tighten partnerships with major customers: consider high-volume sales deals at newly negotiated prices. In this event, move fast to build buffer stocks.

Evaluate, too, whether product lines or SKUs can be streamlined. Simplification removes redundancies, improves efficiencies, and cuts a degree of risk.

Recheck best practice foundations.

The principle holds: process excellence drives sustained performance. Best practices – lean, continuous, integrative improvement, standardization – are central to the functioning of strong, resilient and high-performing supply chains.

Given the scale and variation of global disruptions over the past few years, and what is likely to be a gradual, staggered recovery, the organization’s practices and processes should be reviewed. One example is the use of control tower oversight: many leading manufacturers adopt the technique, ongoing, to achieve enhanced end-to-end visibility and ensure decisions are aligned with high-level strategies. This also improves resilience, because transparent data-sharing and close leadership supervision enables pre-emptive action on noting crisis signals, or a fast response to signs of opportunity.

Consider supply chain redesign

The primary dimensions of supply chain design are cost and speed. Recent decades have seen significant advances in constructs which capitalize on opportunities through, for example, customer segmentation. Digital technologies have also created further flexibility and the optimization of complex trade-offs to maximize margins.

Now, agility should be the prioritized dimension. The ability to flex between bespoke, low-volume production or low-cost, rapid-delivery high volumes – and everything in between – will give significant competitive advantage. 

A watch-out: complexity can cause fragility within the supply chain. Any redesign of the network should be done only after a holistic re-evaluation, referencing the longer-term business strategy. The intention is to strategically align all elements of the supply chain so that, overall, it is better able to pivot to meet any challenge or opportunity.   

Leverage technology

The design of next-generation value networks is rooted in digital technologies and the transformation to mature digital capabilities.

Data, analytics, and advanced computing technologies – including Artificial Intelligence – enable significant performance improvements across the value network. They can also model scenarios to assess trade-off options between the various dimensions of supply chain design. Leveraging technology for margins, value and resilience should now be seen as a mandatory management function.

Reenergize the workforce

Any measures to tighten operations, strengthen the supply chain or enhance its resilience, will only be effective if the organization’s talent is tuned for change. Possibly, this is already under way as part of a digital transformation. However, recheck the pace of change: is it creating a balance between solidity and innovation? Are teams designed for both, and is a problem-solving culture blended with an understanding of risk? Future-proofing the company requires a motivated workforce willing and able to implement the strategies – and keep iterating for improvement.

Collaborate for cohesion

Now is also the time to deepen existing partnerships, and forge new alliances. The overall value chain can be strengthened only so much through internal modifications; often, greater incremental strengthening can be achieved through external collaborations. For instance, assess whether supply side volatility can be reduced through integrated, cloud-based, real-time information sharing with key suppliers. Alternatively, consider closer liaison with customers to shape demand and mitigate against unmanageable fluctuations. Further, expert third-party service providers and industry bodies can assist in assessing new markets or upskilling talent, as just two examples.  

Natural disasters triggered by climate change, cyber security threats, talent and workforce risks due to pandemics: today, these are top-of-mind, and add to the range of other supply chain consideration in what is a ramped-up risk environment. 

A strong, resilient value network will elevate a manufacturer’s competitiveness, allowing the company to thrive despite an increasingly challenging marketplace and these uncertain times.

Book a demo to find out how CCi can help implement best practices to strengthen and improve the resilience of your company’s supply chain.  

CCi is a privately held global company that enables organizations to deliver sustainable results across the value chain, using TRACC, a solution for continuous, integrated improvement.

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