Building Supply Chain resiliency to disruptions

The Supply Chain (SC) is becoming crucial to the increase of corporations competitiveness. The curre...

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Posted by Dave Food on Jun 8, 2020 8:22:44 PM
Dave Food

The Supply Chain (SC) is becoming crucial to the increase of corporations competitiveness. The current-increasingly-global economic environment demonstrates that businesses could better compete if they act in collaborative Supply chains (SCs).

How do we create highly-efficient SCS?

·       Through improving confidence in the SC.

·       By conferring your SC the ability to be resilient.

·       The implementation of edge-management strategies, policies and practices to enhance effectiveness.

·       To understand the interrelationship and interdependency among enterprises in a global SC.

·       Reducing operating costs (e.g. lean manufacturing, strategic inventory, reduced-product lifecycle, Just-In-Time strategics, and outsourcing.

·       Although these new ways of managing bring in attractive business benefits, they reduce the existing-dynamic to face ambiguous events.

·       Advocate the business globalisation increasing extensive networks.

SCs are exposed to numerous-constantly-evolving risks either coming from indoor/outdoor the company. Getting around such risks or diminishing their adverse effects is a CEO management challenge at present.

For a strong SC, it must build up resilience capabilities to react to the damaging-unexpected consequences of events and to quickly recover to its original state and go further towards a new-best state of functions, as competently as possible.

How is it valuable to quantify our company resiliency?

The measurement of SC resilience has not been attempted much. To fill this gap, we can generate a quantitative guide to assess the SC resilience designed for each SC in our business. Begin by defining and deliberating fundamental models in the range of SC management, such as potential risks, their sources and their consequences.

There is always the possibility that several risks happen, each with different characteristics and various-adverse effects both to the SC and the enterprise. Therefore, there are some strategies you can use to lessen the adverse consequences of risk on a SC whilst making it more resilient. The resilience index of a SC to risk is determined by combining the resilience index of companies that encompassed your SC.

The SC resilience could be determined by a case study developed when the SC was previously disrupted due to another risk event. For instance, the transportation disruption of material among several suppliers. In each scenario, the resilience indexes of each company are the relative ability of the company to satisfy the customer.

The fulfilment level is a performing degree of the order fulfilment, put across as a proportion of the total order. In the end, the resilience index of the SC works out influenced by the method put into practice and then analysed.

The exponential expansion of the COVID-19 and China essential role in the global SC make it urgent to consider these adverse circumstances affecting our businesses, such as:

·       The importance of the breaking of leases, cash flow issues and staff layoffs

·       Suspension or termination of contracts for raw materials.

·       Suspension of production deeply affecting our manufacturing processes.

·       The failure or delay in supplying goods or components.

·       The possibility of no payment of loans, or emerging appeals for guarantees.

·       Cancellation or restrictions on travel arrangements, striking the hospitality industry.

·       Postponement or revocation of organised-events like cruises, concerts, and sports.

·       The closing of restaurants, cinemas, theme parks and hotels.

·       The shutting down of malls and retail shops to the public.

·       The possible disagreements relating insurance-coverage for business interruption.

 

What measures to implement to diminish loss?

 

·       There are tools you can use to quantify the resilience of your enterprise SC.

·       Ponder if these difficulties and failure to perform are caused by the burst of disruptive events or the actions to constraint them; keep a record-proof.

·       To alert shareholders on time about the existing-difficulties and inability to perform.

·       Take the necessary steps accordingly and provide evidence of those steps taken

·       Take note of current regulatory-laws, legal stances under various governing-laws; must laws do not tolerate cessation, interruption or postponement of contractual rights and obligations. 

 

Further recommendations: share in-time with interested-party (including employees, shareholders, financiers, and significant authorities) on possible-arising complications to safeguard the continuation of collaboration. The implementation of mitigating-strategies supports the manager in improving the decision-making processes and enhance better resilient SC to a risk.

Is your business resilient enough of coping current disrupting crisis?

Dave Food

Prophetic Technology

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