Visibility is the route to resilience in the supply chain

Visibility is the route to resilience in the supply chain

When I started my career in supply chain management, eyes often glazed over when I mentioned what I did. Today, things couldn’t be more different.

Supply chains are going through a major transformation as they adapt to a set of disruptors. The events of the last few years have demonstrated beyond doubt - to everyone from the c-suite of major corporations to the consumer checking items off their weekly grocery shop - the importance of a resilient supply chain. There has never been a more interesting time to have this conversation.

A lot has been written about the impact of the Covid-19 pandemic. Travel restrictions, staff sickness, panic-buying and fluctuating costs certainly took their toll, creating pressure points particularly around smaller participants in the supply chain. We’ll continue to feel the effects for years to come.

Digital transformation is another major influence on today’s changing supply chain. Businesses have spent the last 20 years becoming increasingly global, spreading their manufacturing in line with the free market and reaching customer bases around the world. Automation is now opening up new possibilities for greater efficiencies when manufacturing takes place closer to home.

A third source of disruption is the rise of e-commerce giants such as Amazon. Customers are demanding cheaper products in ever-shrinking delivery windows, and supply chains must be nimble enough to respond.

Any supply chain professional in their right mind will acknowledge that change and uncertainty are a given. The shock of the pandemic was just the start; major geopolitical events such as Brexit, the war in Ukraine and the possibility of a worldwide recession have raised serious questions about the resilience of the supply chains criss-crossing our globe.

Less reactive, more resilient

My customers are grappling with these changes. How can they manage stock shortages? Should they pass on price increases to customers? How will they cope if their supplier in Ukraine is forced to shut down? Too many businesses are in reactive mode. I’m concerned that the industry at large will overreact, load up on inventory and shut down overseas manufacturing. This will be counterproductive.

In my experience, the businesses that have managed to weather the storms so far are those that have interrogated the potential risk scenarios - be they geopolitical, environmental or financial - and have a solid back-up plan to invoke should the worst happen. Nobody could have predicted Covid 19. But by luck or by design, some managed it better than others. To call on a sporting analogy, we need to move from a position of defense to one of offense. We have to embrace the unknown and reimagine our supply chains accordingly.

Increasing visibility and trust

The key is to build resiliency so that, when the next crisis comes, businesses can protect their inventory, their suppliers and their customers. Technology has an important role to play.

Visibility is more important than ever, and is one of the major benefits of a digital supply chain. Around 90% of my customers are looking one step up and down their supply chain. But in order to increase resilience, they need to be able to see five or six steps in each direction and spot issues before they become problems. The technology is there, and many businesses are embracing it to improve visibility.

But there is a deeper issue: trust. Businesses must see themselves as part of a bigger ecosystem and get better at sharing information. They need access to platforms they can believe in to securely hold information from a diverse set of participants. 

In this scenario, if a container is delayed or a delivery damaged, at the click of a mouse all participants in the supply chain can find out where the problem occurred and adjust their plans to reduce the impact. Blockchain technology can play an important role here, providing an immutable chain of custody that makes key information available securely and in real time.

Sharing information for the greater good won’t come easily for all businesses. For me, it comes down to leadership. In every supply chain there is a powerful player - a Burberry or a Jaguar - who has the authority to set the rules that their suppliers must follow. Smaller participants will soon see the benefit in terms of increased visibility. 

First steps to resilience

There are no quick fixes when it comes to building supply chain resilience. But when I advise clients, improving visibility is first on the list. That requires segmenting their supply chain to get a view of every supplier, and then prioritizing those segments to reengineer it for visibility.

Next on the agenda is decoupling the supply chain. We’ve spent the last two decades building highly integrated, codependent supply chains. They’re great when things run smoothly - but when they don’t, the shocks reverberate throughout the chain. Where possible, businesses should decrease their dependency in order to buffer against those shocks and contain the damage.

I work with clients to design postponement strategies, whereby we delay the final assembly of a product to the latest possible stage in the market to reduce the risk of loss or damage to inventory along its journey. This has the added benefit of efficiency when it comes to localizing products in terms of, for example, power supply.

Data is the driver

With its heritage in data and technology, UST has something unique to offer clients when we’re solving their supply chain issues. As we’ve discussed, visibility is key, and one of the biggest barriers all businesses face is access to information. We can harness that information as well as recommend the most practical solutions.

With or without data, none of us knows what the future holds. It’s time to embrace that uncertainty. Visibility - and trust - are the only sure routes to resilience in the supply chain.

Discover how UST can help you revolutionize your supply chain management.

‍