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Supply chain resilience and sustainability

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Supply chain resilience is a hot topic under supply chain management. Resilience became the talk of the town as the pandemic bought down the supply chains around the world to halt.

Resilient Supply chains

Convinced by the vitality of a resilient supply chain, a new race began among businesses for achieving it.

Supply Chain Summit 2020 by Alcott Global opened up new perspectives for understanding Supply Chain resilience in a better way. Below is an abstract of the same.

The Concept of resilience varies among many. However, let’s understand the perspectives of renowned Supply Chain Experts on it.

Meaning of Supply chain Resilience

According to Pascal Bouye – VP Supply- Global Emerging Markets-MARS, Resilience is looked upon as having two dimensions.

He explains the first dimension as operational including both Internal and external events.

Pascal defines resilience as the ability of the company to resist the unexpected events, to recover and potentially learn from these events to reinvent itself.

He explains the second dimension as being more strategic in nature including consumers, sourcing practices, and lot more.

According to Vikram Agarwal Former Chief Supply Chain Officer • Avon, Resilience is larger than the supply chain itself.

He says while talking of resilience we have to start with the business overall. We need to talk of customer resilience, supplier resilience, product resilience, financial resilience, etc. now within that if we plot out the supply chain resilience it boils down to the resilience of the people.

He also talked about being resilient to sourcing and the ability to keep up the supply lines going amidst any crisis.

The ability to mitigate and edge ourselves against the risk is another aspect of supply chain resilience. Lastly, he spoke about the ability to respond to erratic demand.

According to Frederic Laluyaux, President & CEO • Aera Technology, Resilient companies are the ones that have been able to adapt and manage tremendous transformation happening in the world today. He says The resilience has been amplified in the months of 2020 than ever before.

Challenges for achieving resilience in supply chain management

According to Frederic Laluyaux, The challenges at the macro level is that we are moving to an era from people doing work supported by software and data to an era where the software do the work guided by people.

Due to increasing speed and complexities, the decisions will be made exceeding the organizational structures or the pre-existing frameworks.

In short the complexity lies in adapting to the transformation of people doing work to machines doing work.

.Pascal Bouye stresses having the right people to ace resilience and talent becoming critical in context to AI-Driven systems.

How do we prepare for resilience

The question of “how to assess the supply chain resilience” still has no answer. However it leaves us with an option to prepare for the best.

As mentioned earlier, a resilient supply chain must develop resilience capabilities to react to the negative consequences of unexpected events and return quickly to its original state. In other words, Businesses should bounce back to a new best state after being affected by the risk, and continue business operations as efficiently as possible.

Following are the few ways to look out for:-

Business continuity plans need to be real and tested. For instance, if situations arise for switching the market from one source to another it will be much easier.

Moreover, the real-time data should be used instead of systems which are using historical data for the forecast. This shift is an extremely important capability for building better resilience.

Simultaneously, the Quality of Data is another crucial factor in building resilience. Precisely the data should be clean and sorted in a structured format for use. Unstructured data uses more into sorting and understanding leading to wastage of time.

One should increase resilience and reduce the likelihood of risk events occurring is the aim of supply chain risk management. Hence, Resilience should be considered to the core.

It should be noted that resilience helps to recover system states after incidents take place rather than prevent incidents from occurring

Definitions of supply chain resilience

The capacity for complex industrial systems to survive, adapt, and grow in the face of turbulent change.
The ability of a system (supply chain) to return to its original state or move to a new, more desirable state after being disturbed.
The ability to react to the negative effects caused by disturbances that occur at a given moment in order to maintain the supply chain’s objectives.
“The adaptive capability of the supply chain to prepare for unexpected events, respond to disruptions, and recover from them by maintaining continuity of operations at the desired level of connectedness and control over structure and function.”
The ability to maintain control over performance variability in the face of disturbance and a property of being adaptive and capable of sustained response to sudden and significant shifts in the environment in the form of uncertain demands.
Supply chain resilience is the ability to maintain operations and connectedness under the loss of some structures or functions
“The ability of a supply chain to both resist disruptions and recover operational capability after disruptions occur.“
Definitions of supply chain resilience

Properties of a resilient System

Below is the few considerable properties of resilience.

  1. The measure of disruption the framework can experience and still hold similar controls on capacity and structure;
  2. The degree to which the framework is capable of being self-organized
  3. Capacity to expand limits with regards to learning and adjusting.

Additionally, to comprehend the flexibility of a framework, t must be clearly defined – the resilience of “what to what”.It is essential to characterize what framework state is being thought of and what failure modes are involved.

Resilience Triangle denoting Resilience in supply chain
Figure 1.“Resilience triangle”

Computation of the supply chain resilience index is another method being adapted to get a rough idea of resiliency

This can be computed based on the supply chain company indexes using different methods of company indexes aggregation.The resilient index of each supply chain company for each scenario is according to the ability of each company to respond to the transportation disruption

The supply chain resilience index for each scenario and each aggregation procedure is considered under it

Resilience vs Efficiency

Resilience will remain though it may never replace efficiency. Efficiency is must without efficient systems Companies will run into losses

However,companies have woke up to realize the importance of resilience in supply chain due to the COVID-19 led pandemic.

Resilience and efficiency both will make a stay in the systems even when the after effects of pandemic vanishes.

According to Frederic Laluyaux, A new model of rapid testing and scaling out might come up in the future.

According to experts,We are seeing a convergence between efficiency and relevance with regards to the resiliency.

Efficiency no longer means a scale as in a manufacturing scale or a distribution scale.Whereas, Effeciency means external agility.

Efficiency is not about how economical or how well the production was whereas,Its about how good we are responding to the customers.

Conclusion

Supply chain risks are expanding in numbers and recurrence. They influence the day-to-day activities and steadiness of the supply chain and thereby affecting its ability to satisfy customer needs. Thus, supply chains must be resilient to beat their vulnerabilities and to respond viably to their negative impacts.

Going Forward we can expect any calamity like the pandemic with the potential to disrupt the value chain. If one cannot avoid it one should prepare for it.

Credits section

A special thanks to Alcott Global for arranging the Supply chain summit 2020 and for arranging insightful sessions.

A special thanks to speakers Pascal Bouye – VP Supply- Global Emerging Markets-MARS, Vikram Agarwal Former Chief Supply Chain Officer • Avon, Frederic Laluyaux, President & CEO • Aera Technology for the content.

Image attribution- Free pik

Business photo created by freepik – www.freepik.com

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