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So what steps are companies taking to make their supply chains more resilient ? They ’ re :
■ Creating a full alternative supply chain as a back-up to their existing one
■ Introducing dual sourcing of raw materials
■ Regionalizing the supply chain / nearshoring production
■ Introducing technology for supply chain analytics
■ Increasing inventory of critical components
■ Hiring more digital talent .
The picture is a complex one , with overlapping supply chain challenges , some of which are hard to manage , alongside others where businesses can take direct control . The role technology is playing is essential , regardless of whether it ’ s being driven by efficiency gains , or by a desire to improve supply chain transparency , particularly in an era where visibility is more important than ever .
The two main risks caused by poor supply chain transparency are : a growing reputational risk for businesses associated with suppliers that do not meet the high ethical standards more consumers are demanding ; and the knock-on effects when businesses do not understand regional challenges faced by suppliers . But where does technology come in ? Its role is multipronged . delays and shortages , is readily available , while processing and analyzing data to aid decision-making
■ Cloud based solutions enable people across different regions and countries to see supply chain activity in real time
There ’ s little doubt that those businesses that have taken a proactive approach to building supply chain resilience , with a focus on sustainability , will be in a strong position to weather future storms in the years ahead – whatever they may be .
Before 2020 , it ’ s unlikely that any business considered the possibility of a global pandemic to be anything other than a theoretical risk . Fast-forward three years and the
emergence of Covid-19 has demonstrated that organizations must be prepared for all risks , including those which may only be academic in nature . As such , businesses should plan for all ‘ unacceptable events ’ by looking at alternative sourcing , qualifying alternative materials , reviewing contractual arrangements with customers when they cannot supply , shortening supply chains where possible , monitoring risk indicators , and creating buffers by shoring up inventories with ‘ safety stock ’.
As uncertainty is set to continue on an international scale , and businesses need to prioritize sustainability and environmental stewardship issues , the case for resilient supply chains is stronger than ever . ■
■ Leveraging data is essential to improve transparency and visibility . Accessing data in real time can deliver smart , fast decisions , meaning investment in technology is now a ‘ need to have ’ rather than a ‘ nice to have ’
■ Leading edge technological solutions for improved transparency make the most of advances in artificial intelligence and machine learning , to ensure that data about supply chain challenges , such as
Fraser Paget www . bdo . co . uk / en-gb / home
Fraser Paget is Head of Supply Chain & Logistics Advisory Services at BDO LLP . Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world . It operates in 17 offices across the UK , employing 7500 people offering tax , audit and assurance , and a range of advisory services . BDO LLP is the UK member firm of the BDO international network .
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