The world has witnessed an unprecedented disruption in global supply chains since early 2020, aptly termed as "the great supply chain disruption." Customers in the logistics industry are aware of the challenges posed by the Covid-19 pandemic, conflicts, and droughts, leading to raw material shortages across various industries.
The good news is that the worst of these disruptions has gradually subsided, and the World Trade Organization reports that goods trade has rebounded and exceeded pre-pandemic levels in 2021. However, this experience has underscored the importance of integrating resilience into your supply chains.
We take a look at four strategies to guide you build a resilient supply chain.
Nearshoring: Bringing Production Closer Nearshoring has emerged as a popular strategy among businesses to mitigate supply chain risks. The pandemic has exposed vulnerabilities in global supply chains, such as border closures, transportation disruptions, and manufacturing shutdowns. By nearshoring production, you can gain more control over your supply chain. This approach reduces lead times, transportation costs, and enables you to quickly adapt production based on market conditions, thus enhancing responsiveness.
It's important to note that nearshoring may come with certain challenges. You may encounter higher labour costs or scarcity of skilled workers in certain locations. Additionally, it might require investments in new manufacturing facilities or technology. However, despite these obstacles, many businesses are increasingly adopting nearshoring as a means to establish resilient supply chains.
- Optimizing Inventory Management Another crucial strategy to tackle supply chain disruptions is optimizing inventory levels. Relying solely on just-in-time inventory can be risky during disruptions. Instead, maintaining higher levels of safety stock can ensure you meet demand even in challenging times. Balancing inventory costs and the risk of stockouts is essential. To achieve this, careful monitoring, and analysis of all supply chain aspects against internal and external factors is necessary. Digital tools play a vital role in collecting and analysing data from multiple points, enabling faster and more accurate decision-making.
Enhancing Resilience through Visibility Companies with enhanced visibility into their supply chains can swiftly identify and respond to disruptions caused by natural disasters, transportation issues, or other factors. Robust data management systems and advanced analytics are crucial for detecting potential disruptions before they occur. By proactively identifying risks and taking mitigating actions, you can reduce the impact of disruptions on your operations and bottom line.
However, building supply chain resilience requires more than just implementing individual strategies. It necessitates a holistic approach that encompasses the entire supply chain ecosystem, from suppliers to customers. Collaborating closely with suppliers to ensure adequate capacity and backup plans are in place is essential.
Additionally, maintaining a strong connection with customers to understand their evolving needs and preferences and responding promptly to changes in demand is crucial.
Integrated logistics, supported by technology and infrastructure, plays a critical role in achieving supply chain resilience. Ongoing monitoring and analysis of supply chain performance are vital to maintain agility in the face of unexpected shocks.
With the right logistics partner, implementing these strategies and leveraging our expertise in logistics, you can navigate disruptions with confidence and ensure the continuity of your operations.