Updated · Originally published
Supply chain resilience (SCR) is the ability of a to withstand and recover from various disruptions, such as natural disasters, pandemics, trade wars, cyberattacks, and economic instability. SCR is crucial for maintaining business continuity, customer satisfaction, and competitive advantage in a volatile and uncertain environment.
But how can we measure and improve SCR? What are the best practices and frameworks for assessing and enhancing the resilience of our supply chains? In this article, we will explore some of the answers to these questions, based on the latest research and industry insights.
Why SCR matters
The COVID-19 crisis has exposed the fragility and vulnerability of many global supply chains, as well as the importance of SCR. According to a , only 21% of supply chain leaders reported having a highly resilient network in 2020, while more than half expected to achieve that level within two to three years.
The benefits of SCR are not only limited to crisis situations but also extend to normal operations. A resilient supply chain can adapt to changing customer demands, seize new opportunities, and mitigate risks. A study by BCG found that resilient companies outperformed their peers in terms of revenue growth, profitability, and shareholder returns.
How to evaluate SCR
There is no one-size-fits-all approach to evaluating , as different supply chains face different types of disruptions and have different objectives and capabilities. However, there are some common steps and methods that can be applied to any supply chain.
-
Disruption modeling
The first step is to identify and prioritize the potential sources and impacts of disruptions that could affect the supply chain, such as demand shocks, supply shortages, transportation delays, quality issues, etc. This can be done using various tools, such as risk matrices, scenario analysis, simulation, and optimization.
-
Factor Identification
The next step is to determine the key factors that influence the resilience of the supply chain, such as inventory levels, supplier diversity, production flexibility, network redundancy, visibility, collaboration, etc. These factors can be categorized into two types: enablers and outcomes. Enablers are the actions and capabilities that enable the supply chain to cope with disruptions, while outcomes are the performance indicators that reflect the degree of resilience achieved.
-
Assessment methods
The third step is to select and apply the appropriate methods for assessing the resilience of the supply chain, based on the factors identified. There are various methods available, such as surveys, audits, benchmarks, metrics, indexes, and frameworks.
-
Resilience quantification
Another step to quantifying the resilience of the supply chain is by using the results of the assessment methods. This can be done by aggregating and weighting the scores of the factors, or by using mathematical models and algorithms. The quantification of resilience can help to compare the performance of different supply chains, or the same supply chain over time, and to identify the strengths and weaknesses of the supply chain.
-
Resilience improvement
The final step is to use the quantified resilience to identify and implement the best strategies and actions for improving the resilience of the supply chain. These strategies and actions can be classified into three types: proactive, reactive, and adaptive. Proactive strategies aim to prevent or reduce the likelihood of disruptions, such as diversifying suppliers, increasing inventory buffers, and enhancing security. Reactive strategies aim to respond and recover from disruptions, such as activating contingency plans, reallocating resources, and restoring operations. Adaptive strategies aim to learn and evolve from disruptions, such as capturing feedback, conducting root cause analysis, and implementing corrective actions.
Conclusion
SCR is a vital capability for any supply chain in today’s complex and dynamic world. By following the steps and methods outlined above, supply chain managers can evaluate and improve their supply chain resilience and achieve better business outcomes. However, SCR is not a static or one-time process, but a continuous and dynamic one, that requires constant monitoring, evaluation, and improvement. Therefore, supply chain managers should always be alert and prepared for any potential disruptions and strive to build a culture of resilience in their organizations.
StockIQ has a complete platform for intelligent supply chain planning. Our tools will provide you with the resources you need to stay on top of evolving situations and efficiently plan all aspects of your supply chain. If you want to learn more about how we can help your supply chain become more resilient, or want to see a demo of our product in action, contact us today.