How to Build Supply Chain Resilience

The Resilient Enterprise I The riskmethods Blog
Spider-Man-in-action

Resilience is on everybody’s mind. And spider webs, with their strength and flexibility, are nature’s perfect example of resilience. But most of us find spiders kind of creepy. Besides, strength and flexibility are just half the story. So let’s focus on the superhero Spider-Man, and his amazing ability to manage risk.

A supply network, with all its interconnections, reminds us of a spider’s web. At the same time, the web provides a perfect example of resilience. The silk material is famous for being exceptionally strong and stretchy. With its ingenious design, the web also withstands local damage. Holes do not destroy the entire structure. Of course, the ever-watchful spider springs into action at the first sign of distress. So does the superhero Spider-Man, who uses his spider-like superpowers to manage risk.

1. What is Supply Chain Resilience?

For procurement and supply chain professionals, the twin concepts of resilience and resilient supply chains top the list. What does this mean exactly? Resilience is the ability of material, such as stretchy spider silk, to absorb shocks. The web then returns quickly to the original shape. Similarly, a resilient supply chain is able to withstand negative impacts and recover quickly from disruption.

Identifying risk is a key first step in achieving resilient supply chains. Once you are risk aware, you can anticipate imminent danger and discern less immediate threats. This helps you react faster. Knowing about the potential threats means you can be proactive – act earlier – to mitigate any effects. This is why managing risk is essential to supply chain resilience.

2. How Managing Risk Fosters Supply Chain Resilience

To begin, let’s look at five R’s: robust, resist, respond, reduce, recover. These describe nicely how managing risk fosters supply chain resilience:

  • Robust – Through risk management, your supply chain is stronger. Your enterprise has uncovered its vulnerabilities. For example, you have identified risk in the geographical region of key category suppliers. By qualifying alternative suppliers in other locations, you’ve strengthened the network’s durability.
  • Resist – This means your supply chain can withstand blows or disruption. For example, you have assessed the impact of a temporary shortfall in supply. So you have reserve inventory in case a storm strikes. You survive while others don’t.
  • Respond – The next best thing to Spider-Man’s superhero reflexes is using real-time monitoring. You learn immediately about incidents such as a natural disaster or fire. You can react faster than your competition.
  • Reduce – Through advanced scenario-planning, you lower disruption to operations. Everyone already knows what to do, because action plans have been prepared. This mitigates time and money spent on reactive measures, such as emergency logistics.
  • Recover – When adverse events occur, resilient supply chain operations restart quickly after the disturbance. By managing risk, you reduce damage and can get back to work with less loss. Everyone knows how fast superheroes regenerate from battles with supervillains.

If an organization’s supply chain is not resilient, the company is likely to lose out to the competition. This is the primary factor behind the push for greater supply network resilience. To begin managing supply chain risk more efficiently, procurement and supply chain professionals need to look no further than The riskmethods SolutionTM.

Spiderweb

3. Why Supply Chain Resilience is Important

Most spiders have eight eyes, which helps the arachanids simultaneously take in the big picture, along with small details. And having a total view of risk is kind of like having that intuitive spider-sense. It serves to protect your supply chain from otherwise unforeseeable attacks. In other words, you and your team can react almost instinctively to the slightest sign of disturbance to your network. And as procurement and supply chain professionals, you know that threats are lurking at every turn.

If you are unable to monitor, identify, assess and mitigate risk throughout your supply network, you remain vulnerable to threats and disruption. Hidden bottlenecks or diamond risks, when tier-1 suppliers buy from the same sub-suppler, can rip a hole through the operations of the entire network. The costs of disruption frequently range into the millions.

4. How to Build a Resilient Supply Chain

First, build supply chain resilience into the design. The ingenious structure of the spider web contributes to its toughness. And you need to have danger intuition, and a plan to manage risk. Spider-Man’s spider-like sense of premonition lets him anticipate threats. He’s ready to spring into action before danger strikes.

Similarly, procurement and supply chain professionals can adopt a comprehensive approach to managing supply chain risk. And use artificial intelligence to supply the superhuman powers. Here’s how companies can begin building more resilient supply chains:

  • Use technology to manage risk: Perhaps your organization gathers huge volumes of data. But it could be too much of a good thing. Here an artificial intelligence-based solution can filter out the relevant data you need. It offers Spider-Man speed and accuracy.
  • Make risk information easy to access: Risk scorecards or risk audits are a great start, but the data must be available centrally to be really useful. Make sure employees can easily access that information on their phones and laptops when they’re talking to key suppliers. Enable enhanced superhero vision.
  • Integrate data into your systems: Use automation to make risk management easier. Embed your risk information and data into other systems in your company. Implement a cloud-based system that is easy to use, and readily accepted by your colleagues.
  • Strive for sub-tier visibility: Communication and collaboration beyond tier-1 suppliers contribute to building a resilient supply chain. Achieving sub-tier visibility enhances your danger intuition. You gain a seismic sense, the ability to detect the smallest of tremors throughout the web.

5. What’s the difference between supply chain resilience vs agility?

As we’ve seen, resilience and agility are related. Using supply chain resilience assessment and management, for example, serves to evaluate how strong and flexible your network is. Threats are not only lurking at every turn, they also continually change. Spider-Man has incredible agility. By reacting so quickly, he catches his enemies off guard. So mastering risks as they evolve contributes to supply chain resilience and agility:

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  • Supply chain resilience and COVID-19: The COVID-19 pandemic dramatically exposed the vulnerability of global supply chains. Yet as the virus continues to mutate, responses must change as well. Here, risk awareness helps procurement and supply chain professionals anticipate pandemic-related risk events and adapt their responses.
  • Supply chain cyber resilience: A different type of virus attacks IT-systems and infrastructures. The growing cyber risk demands assessment of suppliers’ cybersecurity and real-time information on cyberattacks. Supply chain resilience includes having disaster recovery plans (DRP) and other risk-mitigation strategies in place.
  • Supply chain resilience and sustainability: Good risk management never lets sustainability risk out of sight. By visualizing suppliers on a world map, enterprises can trace source locations and the suppliers of raw materials. Companies can adhere to sustainability directives and avoid compliance violations.

So, what are supply chain resilience benefits of managing risk? By managing risk, you can potentially avoid disruption, or your operations can rebound quickly. When you foster resilience and efficiency through comprehensive supply chain risk management, you gain competitive advantage. Who knows? Maybe the next time disaster strikes, you are the one who saves the day. Move over, Spidey.

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