Failures within the supply chain can, and often do, compromise efficient operating procedures. It is a problem that, if not immediately recognized and corrected can quickly bring a company to its knees… and in the worst case scenario, can even threaten the companies very existence.
This is a fate that many businesses face, only to either fail to mitigate the issue properly and in a timely manner, or they outright succumb to it. Either way, it is due to a lack of mitigation strategies being consistently put into place by managers in those supply chains.
Being prepared for the worst and equipped for the best is the very idea behind supply chain resiliency.
So today, we are going to give you some of our best advice to for building and maintaining solid supply chain resiliency.
They say that a person is only as strong as their weakest link – and this couldn’t be truer for companies who work with various suppliers for their goods or materials.
Understanding what risks or level of volatility your suppliers bring to the table will go a long way. And yes, everyone from your employees to your partners, to your suppliers comes with their own inherent risks. And when it comes to your suppliers, the people who are responsible for delivering quality goods or materials to you in a timely manner, you absolutely cannot afford to cut corners. If they can’t deliver or are constantly causing your customer’s orders to get held up due to demand issues and the like, you are left holding the bag, so to speak.
Are your suppliers reputable? How does their payment history with you or another company stack up? What are their cycle or turn-around times like?
By monitoring your suppliers on multiple levels and on various criteria, you can better optimize your own supply chain resiliency. If you need to cut ties with a supplier and find one who excels further in the previous suppliers’ weak point, the data you collect will tell you.
Building any kind of business, or any area of said business is going to take a lot of research and a fair amount of trial and error on your part.
While research and raw analytics should not be avoided, implementing all that knowledge is the name of the game. How can you know what risks you may be facing now or in the near future if you are aren’t actively using that knowledge?
After data collection for each quarter of your business year is complete, start taking action. Do not sit on this data. If there is an issue, fix it now or you may end up paying more for it later. Resiliency is all about maintaining a positive position by correcting faults in your chain, not about simply knowing of them.
Now, we sort of covered this when we were talking about considering the volatility of your suppliers, but it goes much further than monitoring those you partner or work with in your industry.
Communicating the wants and needs of your supply chain to your partners, suppliers, and colleagues is a vital step towards building authority in your industry. And building that authority is important because it is through your companies good reputation that other potential partnerships or business may arise.
Furthermore, listen to the needs and wants of your partners and suppliers, as well. This is very much a two-way road that can be mutually beneficial and should always be somewhat reciprocal.
With the power of a strong network backing your company along with the rapport and authority, you will build over time, this one simple method can work absolute wonders for those who work it.
Lastly, many supply chains tend to make the mistake of structuring their efforts for the short-term gains or for only a few years out, at best. Short-term gains are great and all, but resiliency and preparedness benefit a supply chain by making sure it is sustainable.
In actuality, companies should be focusing more on response plans for future events, overnight demand changes, KPIs for the year, and building stronger relationships, first and foremost.
When you scale business only in the short-term, you may find that your earnings quickly tank due to the cost and time involved in constantly having to replace suppliers or re-negotiate contracts with partners when they, all of a sudden, go out of business or cannot meet your growing demands. This is why relationships and building a good rapport in your industry is one of the best things you can do, as we’ve already covered.
Creating formidable supply chain resiliency is one admirable undertaking for even the most seasoned logistics managers to undertake. It just so happens to be the most beneficial thing a company can ever do for their supply chain in general.
In a nutshell, do your research, build lasting relationships, and be punctual when it is time to take action and correct an issue.
Want some more tailored advice about how you can start building better supply chain resiliency right now? Reach out to us here at LTX Solutions and let’s see what we can do for you.