There are a variety of definitions used to define the Supply Chain in the present literature, and the definitions vary. For example, according to Martin and Towill’s article, The Supply Chain is described as a system of institutions engaged in various actions and processes that offer value to the end user by providing products and services through downstream and upstream connections. To provide a more basic understanding, Chopra and Meindl assert that the supply chain is made of all those that are responsible for fulfilling a client’s demand, either through direct contact or in an indirect manner, according to their book.
The last three years have witnessed unprecedented disruptions to the supply chain. From the ongoing COVID-19 pandemic as well as the Suez Canal blockage and the conflict in Ukraine, The necessity to strengthen resilience in supply chains is never more pressing.
While the most severe disruptions to supply chains that have been observed in recent years are beginning to ease, new challenges are coming up, and some are lingering that could be the defining factor in 2023. This includes:
Although preparing for everything is almost impossible, businesses can increase the strength that their supply chains have so that they’re ready for anything 2023 may bring. Here’s how.
By mapping its dependencies, companies can be able to better understand the areas where disruptions could disrupt its supply chain. The main dependencies can include critical systems, suppliers, and raw materials for instance. Once the dependencies are identified then the business can look at different scenarios and decide on the steps it will do if any of the dependencies were to be affected, and the best way to mitigate the effect. For instance what would they do to a crucial raw material became delayed or not available or if weather conditions or civil disturbance affected shipping?
With a well-planned scenario, The company can increase supply chain resilience, which allows rapid and efficient responses to various scenarios.
The following is Utilizing the data generated throughout the supply chain will help anticipate and plan for disruptions, optimize logistics, and reduce the amount of waste. The more digitization in your supply chain, the better the capacity to gather information and increase visibility from end to end. As per McKinsey, 53% of businesses are currently equipped with sufficient or superior information. Utilizing this information could aid in assessing demand and analyzing responses to various interruptions, including earthquakes, typhoons, or flooding. The companies can make use of this data to aid in scenario planning or to identify areas where energy could be saved or improve sustainability. It can also help identify any problems or disruptions in a timely manner, and the business can quickly assess what’s being affected and the steps to follow in the future. Supply chain analytics provide more precise forecasts and synthesize information. The growing recognition of their importance has resulted in massive growth in the last few years. The global market for supply chain analytics is worth close to 5 billion dollars and is projected to expand at about 21% per year from 2023 to 2030, in accordance with Research and Markets. In the long run, using the data management and forecasting system will be able to stay ahead of the outliers in supply and demand. These predictive analytics can help identify probable future trends in demand for sales, exchange rates as well as other key metrics of the supply chain. With the right information and analysis, businesses can anticipate the consequences of a supply chain crisis, which allows them to make quick and efficient decisions during situations of emergency.
A majority of companies have adopted new methods of managing risk in the supply chain in 2021 and 2022, as per McKinsey. A risk management plan implemented is essential to the resilience of your supply chain. In order to achieve this, the business must determine the risks, keep track of possible disruptions and threats, then determine how to reduce the risk. A risk management process that can share information about risks quickly and effectively is crucial to ensure that the business is prepared to be prepared for any interruptions ahead of time. As business environments change or when potential risks become apparent or disappear in the process, the risk management method is able to be modified so that it is relevant and effective in managing any situation.
In order for a risk management strategy to be successful, everyone who is involved within the company must be aware of the concept. Through providing training to the employees across the company, the company can make sure that they are aware of and reduce risks and react to any disruptions. By practicing the method, you can identify the limitations and issues as well as elements that can be improved. Regularly reviewing the process and taking time to record lessons learned to ensure that the approach is constantly improved. The risk management process.
Collaboration with key business partners and suppliers is essential to increase the overall resilience of the supply chain. Collaboration with business partners can enable better data sharing, which increases visibility into the supply chain. McKinsey has observed that businesses that made efforts to improve the visibility of their supply chain from end to end were twice more likely to say they had not faced any challenges caused by supply chain issues in 2022. The more interconnected the various levels, the better their flexibility and resilience.
Collaboration can increase transparency and also lead to higher standards for environmental and ethical conduct. If your aim is to enhance sustainability cooperating with business partners and suppliers will help achieve the objective. They can share relevant information and discuss ways to improve sustainability throughout every step of the supply chain.
THE LARGEST & BIGGEST LOGISTIC INDUSTRY IN THE WORLD