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Supply Chain Resilience

“Resilience implies flexibility and agility.” 18, p.22

 

What is (Supply Chain) Resillience?

Resilience is defined as "the ability of a system to return to its original state or move to a new, more desirable state after being disturbed” 18, p.3; 19
 

How can a resilient Supply Chain be built?

There are a number of principles that should be followed to obtain a functioning, efficient but also resilient supply chain.
  1. Resilience should be designed in, meaning certain resilience features should deliberately engineered into a supply chain. 18, p.13
  2. Collaboration between different Stakeholders is required 18, p.13
  3. Ability to react quickly to a crisis. 18, p.13
  4. Creation of a risk management culture in the organization 18, p.13
image

Own Illustration of Christopher and Peck (2004) 18, p.24

 

1. Designing in Resilience 18, p.14

Making a Supply Chain more resilient consists of three steps.

1. Understanding the Supply Chain
  • You need to understand a Supply Chain first, to be able to make it more resilient
  • Mapping tools can be used to make a Supply Chain fully visible and understand it
  • The aim of Supply Chain Mapping is to find critical factors in a SC
  • These can be long lead-times, single sources of supply, linkages with poor visibility or high levels of identifiable risk
  • For a list of Tools to use for Supply Chain Mapping please refer to the section below
The Result of this step should be a Supply Chain Risk Register, which contains all the critial nodes and links in the Supply Chain Network as well as procedures for monitoring, mitigation and management.

2. Supply Base Strategy
  • Once awareness for vulnerabilites in a Supply Chain has been created decisions on sourcing stategies need to be made
  • You should be aware of the risks that you could fall to
  • Based on this awareness, you need to decide if you have one supplier for a part or multiple ones


3. Design Principles for Supply Chain Resilience
  • “Choose supply chain strategies that keep several options open” because this can reduce the impact of a disruption
  • Re-Evaluate if efficiency is always to be chosen over redundancy and balance the two by maintaining certain safety stocks where possible and desirable

2. Supply Chain Collaboration 18, p.17-18

Collaboration across a SC can significantly reduce and mitigate any risk. Therefore the creation of a Supply Chain Risk Reduction Community has to be a Key Priority.
The Aim within a Supply Chain Risk Reduction Community is to gain as much knowledge about the Supply Chain as possible.
Please refer to the list below to find more tools and guidelines on how to gain detailed insights into a Supply Chain.

3. Agility 18, p.18-21

Important to an agile response are agile partners upstream and downstream of the focal company. The two aspects of agility are Velocity and Visibility.
1. Visibility
  • Supply Chain Visibility describes the ability to see from one end of the SC to the other.
  • To increase the Supply Chain Visibility, close collaboration between and even within companies is required, because every company or even busines unit tend to maintain their own data silos.
  • Besides Information Silos, the SC Visibility can be impaired by larger inventories up or down stream of the focal firm. This is in part also responsible for the Bullwhip Effect.
  • For tools on how to increase Supply Chain Visibility please refer to the list below.

2. Velocity
  • Supply Chain Velocity describes initiatives to reduce the time, that any good needs to travel through the entire Supply Chain.
  • The time in this case is to be understood as the time of order at the supplier until the focal firm delivers to its customer.
  • To achieve more velocity in a Supply Chain, there are three foundations:
1. Streamline Processes
2. Reduce inbound lead-times
3. Reduce non-value added time, because the most time that products spend in a SC is non-value adding
  • For guideslines on how to achieve these, please refer to the list below.

4. Creating a SCRM Culture 18, p.21-22

Just like having coroporate cultures for e.g. TQM, it is also important to have a Risk Management Culture in your business. It is important that this culture does traditionally not just circumspan BCM but the entirety of SCRM.
To achieve a strong Risk Management Culture, several measures can be taken:
1. Strong leadership in this topic from the top of the organization
2. Have a SCRM-responsbile board member
3. Include Supply Chain Risk Assesment as the formal part of every decision making process at every company level
4. Create a Supply Chain Risk Management Team and have that team create and maintain a register of all currently known SC risks

 

 

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