As business leaders, we focus our time and attention on ensuring that our business and supply chain is robust: strong, healthy and capable of performing under a variety of scenarios. This robustness is often about upside potential: Can I fill orders for that new customer? Is my production and delivery time quick enough? Is my manufacturing capability reliable? Do I have the right raw materials in place? This view of robustness can be very inward-looking.
Resilience, on the other hand, is sometimes overlooked and undervalued. The Merriam-Webster dictionary defines resilience as “an ability to recover from or adjust easily to misfortune or change”. Resilience and supply-chain resilience is what your business needs when something happens TO you. Resilience helps you adapt and recover from an outside force.
How will your business be impacted if…
Your primary suppliers merge?
Your largest customer switches to a new supplier?
Your inbound or outbound transportation is disrupted?
The economics of your target markets dramatically change?
Is your supply chain resilient? Can you adapt and recover quickly? Will one significant event flip your business from profitable to unprofitable?
Over the past several weeks, I’ve had discussions with business leaders over these very topics. Given the pace of change in the chemical industry, that’s not surprising. Major distributors (Univar and Nexeo) are merging. Large enterprises are combining, adjusting, then breaking apart (Dow + Dupont >>> Corteva & Dow & DuPont). Logistics disruptions are increasing, in the form of both man-made disruptions (USGC rail and truck congestion, lack of truck driver availability) and nature-made (low water levels on the Rhine River leaving both products and tourists stranded). US-China tariffs are impacting economics and trade flows.
How well is your business responding to these and other disruptions?
A resilient supply chain is purposeful. It is designed to identify and anticipate risks, avoid or reduce disruptions, and minimize the impact of those disruptions. When stuff happens (and it will), you’d like your team to calmly implement “Plan B” rather than scrambling to find solutions and wondering how to make it happen.
As we head into the new year, it’s a great time to evaluate your supply chain resilience:
Assess – Assess your current supply chain risks versus likely (and unlikely!) scenarios, asking what if questions. What if your primary supplier can’t deliver key raw materials on time? What if several larger orders hit at the same time? What if there are no truck drivers available? What if a key customer switches supplier? What if tariffs are implemented or taken away? Now is a great time to ensure your team has a plan in place to accommodate and adjust to these changes.
Ask – Ask your supply chain partners (suppliers, service providers, customers) for their plans. Is there a business continuity plan in place? Do they have supply alternatives? Where does my company fit in your current and future reality? How can you help me if any of the scenarios come to fruition? There’s usually a symbiotic relationship across the supply chain. Having purposeful discussions and plans with your supply chain partners boost the resilience of all involved.
Plan – Plan for optimal and suboptimal outcomes. Review raw material and finished good inventories to optimize for seasonality and scenarios. Plan market and logistics alternatives if tariffs make trade into specific markets cost-prohibitive. Identify supply and service alternatives… and build them into your sourcing strategy and supply plans. Plan your responses, actions and communications. Know the triggers, actions, and decision makers.
Do – Just do it. Implement the plans and strategies you’ve developed. Build and improve relationships with alternate suppliers and service providers. Match your inventories and your supply chain to your business and to your customers’ needs. Do it now and be prepared for future success.
Supply chain resilience is not an option, it’s a necessity. Assess-Ask-Plan-Do your way to a more resilient supply chain.
Need assistance in getting started or making it happen? Progressio is just a call away.