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How to Increase your Supply Chain Resilience
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Almost all businesses recognise the importance of supply chain management and supply chain efficiency – but what about supply chain resilience?
Think of it this way: you’ve just bought a really good pair of running shoes, but you want to preserve them as best as you can to ensure that they remain in good condition despite various weather conditions or pavements that you might run on. This requires thoughtful care and action to preserve the quality of your new running shoes, but there are things that can be done to make the shoe stronger and last longer (or anything new that is purchased). The same can be done for your company’s supply chain – and this is called supply chain resilience.
What is supply chain resilience, why is it important, and how can your company improve its supply chain resilience?
What is a supply chain?
A supply chain is a network of various organizations, technologies, resources, or even individuals that contribute to the creation or delivery of a product or service. Any entity that is involved in the creation and delivery of a product or service from start to finish, such as sourcing raw materials to dropping off the package at someone’s front door – is considered to be a part of the supply chain of a company.
Usually, a supply chain consists of multiple stages and steps: such as procurement of the product, manufacturing the product and distributing the product to retail stores. Each stage in a supply chain involves a different set up expertise: such as designing, sourcing, producing, packaging, transporting, or logistically planning of the product or service to be distributed and delivered.
Supply chains often make use of different suppliers, stakeholders, manufacturers, retailers, customers, and distributors to prove effective and to offer widespread availability of products and services. Each stakeholder is pivotal in a supply chain, and through collaboration and communication is essential to any company looking to create an effective and successful supply chain.
Why is supply chain resilience important?
Supply chain resilience is important as it helps businesses and organizations to suffer from the consequences of the natural business cycle: such as a newfound lack of materials or resources to keep the business going. Supply chain resilience ultimately helps a business to be more “sturdy” in the event of an unexpected challenge, and to carry on with business as usual.
If companies seek to improve their supply chain resilience, it can help their business to be more capable in the midst of various disruptive processes: such as political indifference that could have an effect on the business, the negative effects of a natural disaster, and even grave situations such as the most recent Covid-19 pandemic which shut most of the world down entirely.
Supply chain resilience can also help companies to build a competitive advantage, as supply chain resilience can help them to meet their customer needs, lower business costs, and improve overall business efficiency. Also, supply chain resilience can result in more transparency with their customers, stakeholders, and suppliers – cultivating an overall better relationship due to their demonstrated efforts to improve upon risk management, quality, and reliability through the use of a more resilient supply chain.
👉 Basically, increasing your supply chain resilience isn’t just better for the environment – but it could be better for your business overall, too.
Supply chains have become increasingly difficult to manage, as many supply chains are now operating on a global scale.
In addition to this, with more environmental regulations becoming necessary – supply chain management is more strenuous and difficult to manage than ever before. Supply chain resilience can help to improve supply chain management, which can reap several benefits environmentally and economically for a business.
👉 Supply chain resilience is important because it can help companies to improve upon risk management, business operations, overall efficiency, and build greater transparency and trust between their stakeholders and customers – resulting in a competitive advantage.
How is supply chain resilience different from supply chain visibility?
Supply chain resilience and supply chain visibility are similar concepts, but they aren’t the exact same thing. This is because supply chain visibility refers to a company’s ability to monitor and manage the goods and materials that are being moved throughout a supply chain – all the way from suppliers to customers. Supply chain visibility requires collecting and analyzing data from these various sources throughout the supply chain: such as the transportation used, warehouses, and retail stores.
On the contrary, supply chain resilience is when a supply chain is able to act quickly and effectively – even in the midst of a consequential, unforeseen event. Supply chain resilience also specialises in reducing the impact to be had on stakeholders, suppliers, and customers when chaos ensues. Supply chain visibility and supply chain resilience can both help to improve efficiency within a business – but supply chain visibility does not guarantee supply chain resilience. Each are two separate mechanisms that help to improve supply chain management and efficiency within a business.
👉 It is possible to have good supply chain visibility without agility, risk assessment, and methodically planning – but these skills are compulsory when seeking to increase supply chain resilience. Supply chain visibility is more concerned with providing accurate information regarding the entire supply chain, whereas supply chain resilience is focused on becoming stronger and more agile to function even when challenges arise.
Can increasing supply chain resilience help to reduce carbon emissions?
Supply chain resilience isn’t just good for business and overall improved efficiency – but it can be good for the environment and reducing emissions, too.
There are several ways in which supply chain resilience can help to reduce carbon emissions. For instance, improved supply chain planning can help to diversify the supply chain and result in better risk management – which can help to reduce waste, improve efficiency, and reduce energy consumption. All of these ultimately help to reduce carbon emissions.
Another example in how supply chain resilience can help to reduce carbon emissions is seeing that supply chain resilience often results in more efficient transportation: such as by using greener vehicles, choosing optimised routing plans for delivery, or consolidating shipments. Both of these practices result in less greenhouse gas emissions produced.
Seeing as supply chain resilience is built on several pillars, one of them being improved collaboration, better relationships and the communication skills required to do so can result in more efficient information sharing and resource allocation – which can also result in less waste and reduce carbon emissions.
Lastly, supply chain resilience is often built on sustainable sourcing practices, meaning that the root of the product or service in a supply chain looking to become more sustainable and resilient doesn’t have as large of an environmental impact or carbon footprint to begin with. This is because the majority of sustainably sourced materials are recycled or locally sourced, meaning that transportation-related emissions are often reduced as a result of sustainable sourcing.
👉 Ultimately, due to the nature of curating supply chain resilience, carbon emissions are often reduced when creating a more resilient supply chain: seeing as supply chain resilience requires more sustainable and efficient tactics to run more effectively.
What are some ways a company can increase its supply chain resilience?
There are several ways in which a company can increase its supply chain resilience, as strengthening supply chain resilience is achieved through a variety of practices and tactics to help a business keep moving – even in the midst of unwanted disruptions.
Here are just a few ways that supply chain resilience can be improved:
- Risk assessment: Businesses seeking to improve their supply chain resilience should seek to perform a risk assessment throughout their supply chain to recognise their weak points more easily, and implement plans for improvement later on.
- Diversify: Supply chain diversity can help to provide a broader range of transportation routes and varied sources for inventory, so that the business is not dependent on a single source. In other words, “don’t put all of your eggs into one basket”.
- Collaboration: Supply chain resilience can be improved if companies seek to curate better relationships with their suppliers and partners, as it can result in overall better visibility and transparency across the supply chain.
- Implementing the use of technology: Making use of technology for improved data analytics and management with the use of artificial intelligence or blockchain can help to improve supply chain performance and risk management.
- Agility: Businesses should seek to be more agile and “quick on their feet” to adapt their supply chain and business processes in order to comply with new environmental regulations and geopolitical landscapes with ease. This means ensuring that there are “backup plans” ready to go in the event of a change of plans.
- Ongoing Improvements: A supply chain cannot stay resilient with an effort that is made once; it needs consistent care and attention to ensure that supply chain resilience is maintained and improved over time.
These are some of the most important and effective ways that a business or organization can improve their supply chain resilience.
What are the other benefits of supply chain resilience?
Companies that seek to improve their supply chain resilience can indirectly benefit in other ways that will also help to improve the environmental criteria of their company, and also to garner new financial opportunities to expand their business. For instance, seeking to increase supply chain resilience can help companies acquire new certifications such as ISO certification or work towards becoming B Corp Certified – both of which will appeal to future investors and customers, and ultimately expand their business.
Another benefit of supply chain resilience that may not be obvious to most is that it could help businesses to comply with future environmental regulations more easily. This is because increasing supply chain resilience requires companies to improve their communication skills, improve risk management, diversify their suppliers, and become more agile – all of which can help companies to adhere to the several new environmental regulations being passed.
Overall, there is no wrong way to go with seeking to improve supply chain resilience – as it can help companies to improve their business in both an economic and environmental sense. Luckily, there are several different ways to increase supply chain resilience – and almost every company no matter their shape or size has access to one or more of these tools to improve their supply chain resilience.
What about Greenly?
If reading this article about how to increase your supply chain resilience has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
It can be difficult to know where to start when it comes to improving supply chain resilience in your company, but don’t worry – Greenly is here to help you and your business manage your supply chain and many other environmentally friendly criteria. Book a demo with one of our specialists to learn more.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
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