Managing or operating a supply chain is an extremely complex process that has many moving parts. Be it local or global, supply chains have a lot of moving parts that allow for timely deliveries, manufacturing, and more. Due to the sheer number of factors involved in a supply chain, the threat of disruption is immense. These vulnerabilities include such things as trade wars, natural disasters, cyber-attacks, and even theft. This means building something called supply chain resilience into your operation is critical.
What is Supply Chain Resilience?
The Meaning Of Supply Chain Resilience
In the past, supply chain resilience was considered an extra expense. However, in modern days the long-term success of a company is tied to its ability to overcome obstacles. To better understand what makes this true you need to understand exactly what supply chain resilience is. In short, supply chain resilience is the ability that a chain of supply has to prevent or mitigate disruptions to the chain, as well as its ability to recover. Preventing and planning for supply chain disruptions are the first part. The second part is how efficiently the supply chain can recover from disruptions. Together, this is considered supply chain resilience.
Disruptions Deep Dive
If a company or organization doesn’t have proper supply chain resilience, regular disruptions become a common occurrence. This can also lead to overall supply chain failure. Resistance is the most important part of resilience. It allows a supply chain to avoid the brunt of disruptions while still maintaining the ability to fulfill orders. For example, if there is a natural disaster, the supply chain should be flexible in order to mitigate the effects.
A supply chain must be able to predict environmental factors and have a plan in place to lessen the impact of the event. Recovery is the second part, and also vital in resilience. This aspect covers how well a supply chain is able to bounce back and resume full operations following a disruption event. The stabilization phase and the steady performance state phase should be as short as possible. Efficient supply chains will be able to shorten the recovery times following and use their performance to improve their supply chain resilience and risk management strategy.
Why is Supply Chain Resilience Critical?
In 2019 alone there were approximately 40 major weather disasters in the world. In fact, each disaster resulted in an average of over $1 billion worth of damage. The dramatic increase in cyber attacks between 2019 and 2020 has led to the denial of service, supply chain disruptions, and even leaks of sensitive consumer information. These disasters not only disrupted lives and economies but also caused costly consequences to the global supply chain. The good news is, resilient supply chains are able to mitigate the risks of all kinds of disasters.
Additional Information: How to build more secure, resilient, next-gen U.S. supply chains
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