According to a recent Gartner survey, only 21% of companies report that they have a resilient supply chain, and about half predict to have resiliency in the next 2-3 years. While having a long-term plan may have been more feasible before the COVID-19 pandemic, businesses need to begin to make investments into resiliency today. With a potential second wave of shutdowns and no clear timeline when life will return to “normal,” playing the waiting game is not a viable option.
The first step to take is to understand what supply chain resiliency means for a business. Resiliency goes beyond preserving cash flow to survive difficult times. Resiliency goes far beyond survival and means that a business is agile enough to not only survive difficult times but able to pivot as necessary to sustain and increase success despite difficult times. A robust supply chain strategy naturally lends itself to this type of flexibility across all business operations.
For example, many businesses boast about their “lean” supply chain tactics with minimal suppliers and upfront operation overhead costs. However, this doesn’t take into account the dependency that builds on limited suppliers. When issues like COVID-19 or increased tariffs arise, companies spend millions trying to scramble to find new partners and the compliance process. Additionally, if your factories and vendors are solely overseas, it does not allow for any of the reduced cost benefits and increased speed-to-market of nearshoring. With a diversified portfolio of partners, you’re able to increase the categories your business offers and stay ahead of your competitors by jumping on quick trends. An example of this is alcohol distilleries and perfume labs, quickly switching operations to produce hand sanitizer when there was a shortage.
On top of flexibility, supply chain resiliency is dependent on businesses leveraging data to catch onto consumer trends and looking for innovation, not just long-term, but in the short-term, as well. As we discussed last week, innovation is not just invention; it is finding new ways to improve already existing opportunities. Over the past few months, restaurants leveraged their connections with food suppliers to create contactless grocery pickups for those who struggled to get food during the shortage while ensuring consistent revenue during uncertain times. As opposed to waiting, these innovative businesses used the resources that already existed to create an opportunity to thrive during a difficult time.
As businesses continue to navigate uncertain times, they need to be prepared to make investments into their supply chain to ensure resiliency no matter what the market brings next.