3 Ways to Secure Your Supply Chain
COVID-19 has changed everything it seems, including how companies think about and effectively manage their global supply chains. The pandemic brought to light weaknesses in global supply chains for companies of all sizes. Chinese manufacturing of essential medical goods and equipment came under particular scrutiny, and revealed what some regard as a over-reliance on critical products. Surging customer demand for some goods such as toilet paper, PPE and hand sanitizer solution revealed the inability of supply chains to quickly shift production and logistics in response to rapidly changing trends.
These stresses revealed the fragility of the modern supply chain and require a new paradigm in the construction of supply chain networks for maximum agility. Supply chain resilience refers to the ability of a given supply chain to adapt to disruptive events; to quickly adapt to changes that negatively affect performance; to continue functioning during a disruption; and to recover quickly to optimal performance after a disruption.
Here are three key strategies for improving your own company’s supply chain resilience:
- Rapid Response: truly resilient supply chains need to be able to quickly discover, address, and recover from changed conditions. In order to have a rapid response, you need to be the first to know about threats to your supply chain - Nuna Network’s verify & monitor service is a great way to have realtime alerts on any changes to your vendors’ status.
- End-to-End Data: full data transparency and management is more important than ever. This starts with being able to view from end-to-end, starting with raw materials, semi-finished goods, and finished products, and includes your vendor and their suppliers. The greatest value in having access to 24/7 data like this is being able to act quickly upon any changes. And before that, having a plan in place for disruption beforehand is key. Improving your supply chain resiliency will take time and money - but it will cost double or triple if you try to "crash harden" your supply line after a crisis has already begun. To get started now, first identify what data you can collect, what database or technology partner may be needed, and how to convert these data into actionable insights for discovery, response, and recovery from disruptions. If you know you'll be storing the data of Chinese nationals however, make sure you are PIPL compliant from day 1.
- Build Redundancies: this includes creating small emergency stockpiles for short term lapses in your supply chain to full blown “safety stocks”, as well as having diversified sourcing from a mix of off to near shored suppliers. Note that the real value in additional suppliers can be found if they are also able to produce at greater capacity when there are disruptions to ensure business continuity. Diversification of the supply base away to multiple vendors in multiple locations is a great way to mitigate risks specific to a single area. Some companies have adopted a “China plus one” strategy to spread risk between China and another country such as India, Vietnam, or others. Holding intermediate inventory or “safety stock” is another great strategy, but comes with the additional cost of the inventory, the risk of shelf-life expiration and cash flow hold ups as well. It runs counter to the prevailing “just in time” method of inventory management, but you can weigh those downsides against the cost of restarting from scratch with no inventory on hand in the event of a supply chain disruption from your current supplier.
Need help properly auditing your supply partners? Nuna Network is here. We’re the partner of choice and go-to resource for businesses or individuals seeking guidance in researching, developing, and establishing relationships with companies in China.
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