Just as logistical roadblocks related to China trade tensions began to ease and the supply chain landscape appeared less littered with obstacles, new challenges emerged, and many companies are discovering they are ill-prepared for impact.
As they scramble to adapt, companies will need to invest in both short-term tactical solutions and long-term strategies, adopting new tools and mindsets for analyzing, mapping, managing and monitoring risk. Supply chain vulnerability is a clear, present and increasing danger. The question is not if but when disruption will occur and how well prepared your company is to surmount it. With this in mind, here are three approaches to fortifying your supply chain in an era of escalating disruption.
Diversify
Never before has supply chain health been so dependent on a diverse sourcing network. As sourcing challenges mount, the adage about the danger of having too many eggs in a single basket becomes painfully apparent. Companies are learning the hard way that relying on a single supplier is at best risky and at worst catastrophic. If your company is struggling with sourcing challenges, it’s mission-critical that you act now. Identify alternative partners that can help you diversify and reconfigure your supply chain to get your operations back on track and mitigate damage.
Global order disruption requires a global order solution. Look for partners with highly diversified global supply chain networks. They can help defend your business from disruption stemming from geopolitical turmoil, climatic events, viral outbreaks, unexpected regulatory changes, component or labor shortages or simply unforeseen spikes in demand.
Invest in digitization
Digitization refers to the adoption and deployment of innovative digital technologies that enable companies to achieve greater agility and scalability in supply chain logistics and overall business operations. These technologies include but are not limited to artificial intelligence (AI), surface-mount technology (SMT) and blockchain platforms, and each is critical to helping companies rapidly adapt in the face of disruption.
Supply chain transparency is increasingly crucial, and digitization is key to achieving it. As recent supply chain challenges reverberate, more and more companies realize they lack this transparency. Transparency is not only a reflection of the level of visibility a company has into both its tier-one (direct) and tier-two (indirect) suppliers, but also how available this information is to key stakeholders when conducting both strategic and contingency planning.
The application of digital technologies is making it clear that supply logistics is not a linear chain at all, but rather a dynamic network. Without the network transparency that digitization makes possible, key stakeholders cannot effectively identify, analyze, map, manage or monitor risk to successfully respond to emerging threats and capitalize on market opportunities.
Even in the best of times, transparency helps companies foresee and proactively resolve supply chain issues, foster compliance with changing regulations, and provide ongoing insight to continually optimize logistics for maximum efficiency, performance and profit.
Develop a disruption mindset
Fortifying your supply chain isn’t just about diversification, digitization or any logistic or technological intervention your company may pursue. It’s also about developing a disruption mindset. A disruption, or “anti-fragile,” mindset is one that is comfortable with ambiguity, nonresistant to change, agile and adaptive amid heightened complexity and chaos.
A disruption mindset operates on the assumption that certainty is relative, change is inevitable, and all planning efforts are necessarily provisional and subject to rapid revision based on new data. Because a disruptive mindset is agile and adaptive, those who operate from it can quickly pivot, course-correct and devise novel strategies for effective action. A disruptive mindset is essentially a learning mindset that is concerned not only with winning the game at hand, but rewriting the rules to shape a new and better future.
Companies with processes in place for promoting this mindset can reap the benefits both culturally and operationally. At Pivot International, some of these processes include identifying and questioning core assumptions, encouraging competing views to ensure a diversity of ideas, and time-stamping incoming information to facilitate dynamic analysis and up-to-date planning.
In an era of escalating disruption, supply chain fortification should be the focus of every company. By diversifying, investing in digitization and developing a disruption mindset, your business can not only weather disruption, but also better position itself to successfully compete in a rapidly changing global market.
