The Ultimate Guide to
Supply Chain Resilience: What It Is and How to Improve It
In mid-March, the cargo ship Ever Forward hit some shallow mud in the Chesapeake Bay and became stuck. That this was the sister ship of the Ever Ready, famous for blocking the Suez Canal, was just an interesting coincidence. That there suddenly seemed to be another threat to the global supply chain was anything but merely interesting.
Luckily, the Ever Forward had drifted out of the main shipping channels, and didn’t block any traffic. But around the world, shippers, receivers, and logistics professionals recognized just how important supply chain resilience is. Dodging this problem was luck. That sort of luck won’t always last.
Supply chain resilience is crucial in a world where nearly anything can happen. Understanding supply chain resilience, and how to achieve it, is how you protect your business from the impact of massive events or even just unfortunate events.
What is Supply Chain Resilience?
We’re all familiar with the seemingly constant disruptions that occur in the modern supply chain. Disruptions that can happen at any moment, in any part of the chain. We all know that they’re to be expected, and that we need to be prepared for them. But not many supply chain leaders have a plan for turning that preparedness into action. That’s supply chain resilience.
Supply chain resilience is your ability to handle disruptions to the supply chain with the tools, technologies, processes, and capabilities already in place.
- A resilient supply chain is one that won’t be massively disrupted when the unexpected happens
- It won’t be disrupted because you have expected the unexpected
- You have a plan in place to deal with these expected disruptions
- You have the people in place to handle the plans
- You have the technology in place to support your people
The key to building supply chain resilience is having everything ready when something goes wrong. You don’t want to wait until something goes sideways to come up with a plan. If you are improvising, you’re falling behind. And every day you fall behind can cost hundreds of thousands of dollars — and the reputation of your business.
Supply Chain Risk and Resilience
To build supply chain resilience, you need to identify the risks to your operations. A very simple example is what is happening with the Ever Forward (at the time of writing). We can analyze supply chain risk with three statements.
- If you have cargo on the Ever Forward, you or your customers are at risk of being late
- If you don’t have cargo on there, you’re fine
- If the mud eventually punctures the hull (a possibility at the time of writing) and a clean-up effort is needed in the Chesapeake, that could have multiple immediate and downstream impact on your business.
As we can see, there are both small and large impacts of nearly anything on the supply chain, from the merely irritating (some cargo being late) to the massively disruptive (container shipping on the Eastern Seaboard grinding to a halt for an unforeseeable amount of time).
Supply chain leaders have a plan for whatever might happen.
What is Resilience in Supply Chain Management?
Supply chain management is the handling of the complete chain of the product lifecycle. This includes everything from sourcing to shipping to production to storage to delivery. It encompasses the entirety of the supply chain. As you can imagine, this means there are a lot of risks involved.
In supply chain management specifically, resilience means being able to overcome challenges at any stage of the product lifecycle without massive disruptions to the other aspects. It means overseeing all aspects of your chain and understanding how one component impacts the other.
Breaking to down briefly, resilience in supply chain management would look like this:
- Sourcing: do you have multiple suppliers or sources if one or more is unable to supply for whatever reason? Do you have backups or redundant supply chains?
- Shipping: Do you have multiple routes when one gets blocked or is otherwise unusable? Are you able to bring goods in from multiple locations to make up for shortages elsewhere?
- Production: If a weather event knocks out a production center, do you have others? How long will it take you to divert resources to secondary production centers? Are they ready to be online, or do you have to start from scratch? Can other pre-existing production centers pick up the slack?
- Storage: This is about more than having backup warehouses. It’s about also being able to handle the inflow and outflow of resources and products to keep schedules running smoothly.
- Delivery: Whether it is finished goods or needed production supplies, you need to be able to have trucks and trains running to deliver where you need to go.
Resilience in supply chain management is about more than seeing the big picture. It means being able to take action.
How Important is Supply Chain Resilience?
It’s easy to think about supply chain resilience in the abstract, and even think it is a little overblown. After all, a ship got caught in the Suez Canal once; how likely is it to happen again?
As Ever Forward showed: surprisingly likely.
Of course, ships steering off course are just one of the many, many events that can disrupt the supply chain. There are a few main categories of supply chain disruptions:
- Economic risks: when the global economy goes into a tailspin for whatever reason, including, as we’ve seen, pandemics.
- Political risks: the war in Ukraine is a classic example of a political risk, where national decisions have international implications.
- Environmental risks: climate change is exacerbating massive storms, droughts, and heatwaves that damage all stages of the supply chain. The problem will get worse, which means more preparation is needed.
- Ethical risks: a country, a supplier, or even raw materials could become publicly toxic and go against your own standard of ethics. Cutting ties is great, but you also need to have established ties elsewhere.
With so many risks, it is vitally important to have a policy of supply chain resilience before anything happens.
Supply Chain Resilience During Covid-19
Before the Covid-19 pandemic, it was nearly impossible for most people to imagine how disruptive it would be. One week life was normal; the next it was completely changed; disrupted.
But while the exact ramifications of the Covid-19 pandemic couldn’t be known, the possibility of a pandemic-based supply chain disruptions was known. But many supply chains weren’t prepared for such an event, they weren’t resilient enough. Even though the possibility was known.
Sure, a pandemic is hard to see coming, but supply chain leaders don’t have to predict a global pandemic when building their supply chain resilience strategies.
They need to build a resilient supply chain to combat ANY event that could lead to reduced consumer demand (economic risks), shipping restrictions between countries (political risks), and protection of essential workers (ethical risks).
Strategies for Building a Resilient Supply Chain
Obviously, there’s no way to predict every permutation of possibility in the world. But you can have a strategy for building a resilient supply chain.
How to Build a Resilient Supply Chain
Building a resilient supply chain means having everything in place when something goes wrong. That involves three primary steps.
- Have a Process in Place
- Train Your People
- Use Technology as a Competitive Advantage
Have a Process in Place
If one of your major ports gets blocked, how do you reroute supplies? If one of your suppliers can no longer supply goods (or you no longer want to deal with them) how do you quickly obtain materials from elsewhere — and get them where they need to go? If economic shocks destroy your biggest buyer, how do you overcome that?
You don’t need to say “if a Cat-3 hurricane hits the Gulf Coast and knocks out these four highways, we’ll…”. You just need to have a process in place for altering your southern shipping routes if you have to.
The process involves resupplying inventory, taking advantage of relationships, and making adjustments based on a set of pre-established criteria.
Train Your People
You might have a great plan. But if your people aren’t aware of it, they won’t be able to react in real time. You need a trained staff, and you need a complete staff. That includes knowledgeable engineers, procurement specialists, and supplier relationship professionals.
Basically, you need people who can see in the long term, like market experts, and those who can act in the short term. That’s where a supplier relationship team comes in. If someone in part of your chain suddenly has to cut production in half, you want your portion to come out of the half that’s still being produced.
Technology as a Competitive Advantage
Technology enhances what all supply chain resilience experts crave: visibility and connectivity in the supply chain. If you can see what’s going on, you know how to plan. If you are connected at all stages, you can work with your teams to make adjustments in real time.
What this does is give flexibility. Supply chain technologies can’t solve disruptions, but it can help your people put your processes into place.
Gain Real-Time Visibility Into Your Supply Chain
Real-time visibility helps you identify disruptions as soon as they start to become problems. A real-time visibility platform helps you see all parts of your supply chain operations so that you can track your shipments, and, just as importantly, see where the system starts tightening. A real-time visibility solution gives you a lot, including:
- Predictive, dynamic ETA
- Customized notifications and alert, so you can track what is important and not be bothered by what isn’t
- Inbound and outbound visibility
- Temperature tracking to stay in regulations
- End-to-end multimodal visibility
A good example of this is the rapid rise of ocean fleet visibility. If a storm is brewing in the Malacca Straits, you can see that immediately and see how your ships and your goods are slowing. You’ll see what true ETAs are, and if you need to change customer expectations and your capabilities. You can adjust the rest of your supply chain to make up for that.
Real-time visibility gives you a chance to put your supply chain resilience strategy into action the first moment it is needed — and maybe even before.
Stay Up to Date With Current Trends
There are sudden disruptions to the global supply chain, like a natural disaster or the Ever Ready. There are slowly-developing ones, such as the Russian buildup to the Ukrainian border. There are developing disruptions that are both slow and fast and incorporate multiple aspects of the chain, such as the Covid-19 pandemic.
Whether thinking about political developments, climate predictions, or the impact of new technologies, you want to stay up-to-date on every development. Doing so helps you in two ways. You won’t be taken by surprise, and you can plan and adjust your processes accordingly.
Having access to commentary, insights and perspectives for supply chain, logistics and transportation professionals is a key part of supply chain management resiliency.
How Unilever Demonstrated Real-Time Supply Chain Resilience
In early 2019, the multinational consumer goods giant Unilever began using the FourKites end-to-end visibility platform to improve deliveries in the South African market. With six international borders to deal with — including those of two independent nations within South Africa’s borders — the logistics of shipping were already extremely complex.
Then COVID-19 hit. Border delays became stretched out. Shipments of both raw materials and finished goods were delayed indefinitely. The supply chain was being broken at several stops.
Unilever was able to leverage FourKites’ Custom Geofence capabilities to harness predictive data. Alerts were set when border delays were even longer than usual. This knowledge allowed the team to take action and make targeted decisions that maximized the use of limited resources. They paid attention to what mattered and weren’t bothered by what didn’t.
Predictive data meant proactive steps. In using it, Unilever protected the other parts of their production and delivery cycle from undue disruptions. They kept the entirety of their supply chain flexible and resilient.
Supply Chain Resilience Is About Planning and Preparing
A workers’ strike at one trucking depot halfway around the world will rarely make headlines. But that could delay trucks that service an intermodal. Goods can pile up, and trains can’t make deliveries, and ships can’t unload at ports. Just like that, workers’ dissatisfaction in one small area of the globe rippled out across the supply chain.
Disruptions can be like a pebble in a pond. Or they can be like a giant boulder catapulted into a barrel of water. Either way, you have to be prepared in order to have true supply chain resilience management. You need the process, the people, and the technology in place to successfully keep your modern supply chain running.
You can’t predict everything. But to be successful, you have to plan for anything.
Get Started with Supply Chain Visibility from FourKites
The road to stronger supply chain management starts with FourKites’ global supply chain visibility software. Contact our team to learn more.