September 16, 2022 The Road to Supply Chain Resiliency

How companies can increase their supply chain sustainability and develop long-term resiliency.

By Rajesh Kalidindi, founder, CEO – LevaData

Constant volatility is the new normal, and the impact of ongoing disruptions is being felt around the world. The complexity of this volatility has underscored how important it is for companies to diversify their supply chains and proactively take measures to ensure supply continuity that includes investing in US-based operations.

By anticipating the effects of potential supply disruptions to mitigate their effects and creating capacity through robust supply and risk management capabilities, companies can increase their supply chain sustainability and develop long-term resiliency.

Diversifying Supply Chain Exposure

Companies and consumers around the world have been affected by prolonged supply chain disruptions, which have been exacerbated by government restrictions such as China’s Zero-COVID policy that has resulted in unanticipated lockdowns.

China plays a massive role in the global supply chain because of the many products it produces, from medical supplies to electronic components. Lockdowns have prevented ports, manufacturers, distribution facilities, and others from operating, resulting in significant downstream effects to the businesses that rely on them.

The sheer volume of disruptions in China alone has increased the importance of the conversation about actions that companies can take to minimize risk and quickly respond to ensure supply continuity.

In response, some US companies are shifting operations back to the US and nearby countries. President Biden recently signed the Inflation Reduction Act, which includes an industrial policy to build up US manufacturing to reduce the current reliance on China’s materials and components.

Although diversifying a company’s supply chain footprint and operations is important and can reduce risk exposure, it isn’t the only factor that must be considered.

Building an Intelligent, Rapid Response Engine

To increase supply security and overall business resiliency, companies must have robust data and intelligence to sense and respond to potential risks and immediately turn those insights into action.

As markets become increasingly volatile, the ability to immediately identify available suppliers and dynamically source alternate products or components is vital. This ability is even more important in the face of a potential risk event that will require immediate action to avoid disruptions.

Many companies still rely on spreadsheets or outdated systems for supply management, including part sourcing and risk identification. By the time new insights get to key decision-makers, the data can be days or even weeks old. As a result of this cumbersome process, organizations are behind and lose supply to companies that already have insights they can use to acquire a competitive advantage. Time is of the essence because flagged risks may increase in severity or have already occurred before information can be acted upon.

Advanced technologies like AI combine data from multiple sources, increasing companies’ power to immediately identify opportunities, including costs and risks, and respond without losing valuable time. Being able to monitor and respond to risks is essential­­––but it is even more powerful to have an integrated capability to sense opportunities and act before anyone else sees them.

This is especially true when companies have a limited number of suppliers for a product or component. When a disruption occurs, every manufacturer races to find alternate suppliers. This is when the company that is proactively monitoring their risks with the latest insights and analytics has the advantage because they have already executed a rapid response that locked in the parts they need.

Increasing Collaboration across the Supply Chain

With an intelligent supply management engine in place, companies can ensure information flows seamlessly across the value chain, from procurement and supply chain teams to product development suppliers; manufacturers; and ultimately, their customers.

Embedding risk management into an overall supply management process streamlines supply chain planning and improves the entire rapid response process. It also increases productivity and efficiency by taking into account all of the potential consequences of a potential disruption from the outset.

Companies can build resiliency by constantly “testing” different supply chain scenarios and identifying potential risks before they become disruptions. They can simulate worst-case scenarios based on risk insights and proactively address points of weakness with manufacturers and suppliers, benefitting all involved parties.

Mature disruption preparedness requires a comprehensive view of all potential data and information to fully understand the potential impacts and qualify viable options. Being proactive about identifying a supply chain’s weaknesses makes it possible to scenario plan for multiple degrees of disruption severity and eliminate or minimize negative outcomes.

Invest for the Future Now

No company is immune to global supply chain disruptions, and leading organizations are already prioritizing investment in supply chain resiliency to prepare for whatever will come next.  

Truly intelligent supply and risk management used to be available to only the most sophisticated supply chain companies. However, technology has leveled the playing field, turning a competitive advantage that was previously available to select companies into an asset that everyone can use. It’s important that companies seize this opportunity and act before they are left behind.

Rajesh is a seasoned supply chain executive with demonstrated experience in managing multibillion dollar spend portfolios in the tech industry. He founded LevaData to accelerate procurement transformation by using the power of data and AI to create a competitive advantage for enterprises. He is a recognized and respected supply chain visionary and thought leader with a keen understanding of the global supply chain business and technology trends. Rajesh’s writing has been published in many industry and business publications, including Forbes, The Wall Street Journal, Supply Chain Management Review, and Supply Chain Brain. 

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