With a 412% year-over-year increase in the mentions of “supply chain issues” by chief executives during the latest company earnings season, it likely comes as no surprise that the COVID-19 pandemic has brought a painful realization that today’s global supply chains are constantly exposed to a range of risks that can turn into costly disruptions.
The recent blockade of the Suez Canal, the closure of the Port of Yantian and the lack of shipping capacity are clear examples of disruptions that had serious consequences for many industries and businesses. But at the same time, we are also seeing rapidly increasing consumer demands, largely because of the explosive growth of e-commerce.
So, what can we do about it? Today’s supply chains are global, interconnected and complex — and will remain that way — and we need to better equip ourselves to anticipate and proactively manage the problems that arise.
And how do we do that? A significant part of the solution is to create greater resilience and agility by improving supply chain visibility:
Take advantage of new technologies to improve visibility and responsiveness
To be competitive in today’s complex supply chains, companies need to be able to manage disruptions before they occur — reacting afterward is too late and too expensive. But how can you manage what you don’t see and plan for what you don’t know?
With more well-developed business models and processes supported by machine learning (ML), that predictive end-to-end visibility can be achieved, resulting in a more resilient and agile supply chain.
More diversified supply chains
For a long time, supply chains have been increasingly slimmed down by just-in-time and large-scale outsourcing to low-cost countries, often to specific areas and suppliers. An outsourcing strategy focused solely on costs has led to a lack of diversification in global supply chains, the effects of which we are now seeing in the form of shortages of goods, materials, labor, and transportation capacity.
The fact that 12% of the world’s sea transport crosses the Suez Canal was the reason why the effects were so great from that event. The same goes for the Port of Yantian, where 90% of all the world’s electronics pass.
A resilient and agile supply chain cannot simply focus on a low-cost strategy; new, future-thinking ideas — such as more near-shoring and dual-sourcing — are required to create diversified supply chains.
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