Supply Chain Resiliency
The COVID-19 pandemic has exposed the fragility of global supply chains and is encouraging forward-thinking firms to act now to foster supply chain resiliency. Businesses are shifting away from a singular focus on stockpiling inventory to respond to sudden shifts in supply and demand, and instead focusing on how to use digital supply network technologies to create a more agile, demand-driven, and patient-centric resilient supply chain.
Prior to the disruptions caused by COVID-19, pharma companies were already realizing that investments in supply chain resiliency are a strategic imperative—and an agile supply chain can be a key competitive differentiator.
Capabilities required for supply chain resiliency
A resilient supply chain is one that can withstand and quickly adjust to sudden disruptions or changes in supply and demand. By achieving supply chain resiliency, organizations are able to pivot fast when the situation demands it. Supply chain partners are able to act swiftly to minimize impact and accelerate recovery from disruptions like extreme weather events, raw materials shortages, pandemics, cyberattacks, and other types of emergency situations.
Supply chain resiliency requires six essential capabilities. The first is flexibility, or the ability to adjust supply chain structures and processes as necessary when conditions change. The second is adaptability, or a willingness to change operational structures and processes in order to meet the requirements of a new situation or environment.
The third is visibility. This enables stakeholders to identify issues or obstacles anywhere in the end-to-end supply chain and make informed decisions. The fourth capability, anticipation, is the ability of supply chain partners to detect emerging trends, possible disruptions, and potential opportunities early. Fifth is recovery, or the ability of the supply chain to return to business as usual—a normal state of operations—after a disruption. Finally, and most importantly, is collaboration, or supplier collaboration. This is the practice of buyers and suppliers working together to identify and respond to disruptions, coordinate supply chain planning, and successfully carry out supply chain optimization measures.
Learn more about building a more agile, resilient supply chain. Download the eBook: What You Must Know to Survive a Supply Chain Crisis: 5 Priorities from 4 Industry Experts.
Building resiliency into supply chains
There are a number of things your business can do now to build resilience into your supply chains:
- Identify and assess potential vulnerabilities in the supply chain and implement resilience building measures where possible.
- Develop a risk mitigation plan delineating the products and services most likely to be affected by supply chain disruption.
- Diversify your supplier network, identify secondary sources of supply, and build extra capacity into your facilities and processes.
- Improve supply chain transparency and foster collaboration by investing in cloud-based, multienterprise supply chain networks.
The best way to enhance supply chain resiliency is to leverage digital technology and transition away from the traditional, linear supply chain model—adopting a new supply chain paradigm: the dynamic and integrated digital supply chain network.
Digital supply networks offer trading partners superior end-to-end visibility into their supply chains, making real-time data and actionable insights available to all stakeholders. Identifying vulnerabilities and potential bottlenecks in any tier of the network is easier. Communicating and collaborating with new and existing partners is simpler. And when coupled with the use of IoT sensors, advanced track and trace solutions, predictive analytics, and smart factory initiatives, issues can be detected and resolved in real time—before they hurt your bottom line.
The many benefits of supply chain resiliency
By embracing digital transformation and using it to improve supply chain resiliency, companies are better positioned to thrive in unpredictable times. They are better prepared for sudden and dramatic shifts in supply or demand and can move proactively to bolster the supply chain on which their business depends.
Firms that invest in supply chain resiliency may see improved collaboration across their supply network, shorter product development cycles, increased output capacity, greater productivity, and reduced exposure to risk. Companies that achieve a high level of supply chain agility and resilience may experience faster growth as a result of being able to take advantage of critical opportunities arising from unexpected change and greater innovation as a result of enhanced collaboration.
Supply chain resiliency in the pharma industry
One sector of our economy that is being forced to reckon with the fragility and increasing complexity of its supply chain is the pharma industry. Pharma companies and healthcare organizations have struggled with fragmentation and a lack of visibility, making it difficult to respond effectively to sudden disruptions that can put patients' health and lives at risk. By investing in digital supply chain networking technology and multienterprise work management software, they can increase supply chain visibility and build a more responsive and resilient patient-centric supply chain. By leveraging technology that is designed to improve the flow of information and support collaboration across the healthcare value chain, they can boost supply chain resiliency and profitability while enhancing their ability to provide patients with the medications and treatments they need.
Learn how that pharma industry is building resilience to supply chain disruptions. Download the IDC Whitepaper: Solving the Pharma Supply Chain Struggle.
Supply Chain Resiliency FAQs
What is supply chain resiliency?
Supply chain resiliency refers to the ability of a supply chain to minimize the impact of and recover rapidly from sudden and unexpected disruption. A resilient supply chain is one that is able to anticipate change—that can detect and respond to possible threats and opportunities early—and restore normal operations quickly after a disruptive event has occurred. It is a supply chain that can survive, adapt, and prosper in the face of continuous and unpredictable change.
How do you strengthen supply chain resilience?
You can improve supply chain resilience by increasing the surge capability of your suppliers, diversifying your manufacturing and supplier bases, enhancing risk monitoring capabilities, using IoT sensor data to detect supply chain disruptions in real time, and leveraging a variety of other digital supply chain technologies. One of the smartest ways to boost supply chain resiliency is by investing in digital supply networks, or cloud-based supply chain networking technology that helps improve end-to-end visibility and foster collaboration across trading partners through real-time information sharing and shared workflows.
Why is supply chain resiliency so important now?
Resiliency is critical because the potential for widespread supply chain disruption is at all time high due to geopolitical instability, trade disputes, climate change, and public health concerns. Supply chain resiliency is vitally important to companies that hope to thrive in an increasingly unpredictable world.
What are some digital technologies that can help us improve supply chain resiliency?
Some of the digital tools organizations are using to boost supply chain resilience include cloud-based digital supply networks, IoT devices and sensors, and multienterprise work management applications.
What metrics are used to assess supply chain resiliency?
The three most common metrics are time to recover, time to survive, and time to thrive.