How to shockproof your supply chain

In the last year, there were some unprecedented logistical challenges brought forth by the COVID-19 pandemic. That lead as a warning that these new and different times were volatile, uncertain, complex and ambiguous. Supply chain networks are now unprotected from new risks such as new business models caused by the pandemic, climate change and natural disasters leading to high vulnerability of existing business models, and ever-expanding cyber-attacks. Despite all of this, there is a way to shockproof your supply chain and make it more agile and resilient to all of these challenges, and here is how. The first step is to transfer a part of the work to a 3PL professional service.

What is a shockproof supply chain?

Your shockproof supply chain must be able to solve a problem.  Another thing that it needs to be is adaptive and ready to respond to volatility and risk, agility has become a key word in supply chain strengths after 2020. The third factor that your supply chain needs to have is information transparency or end-to-end visibility. These two notions are highly linked to trust and security, and as such are highly important. Newer times are also pushing for a more personalized customer experience with the emergence of demand-supply chains. The last thing that is vital for having an efficient supply chain is that it must reduce complexity and cost.

You will need to map out and make a clear overview of the customer side.

Have a clear overview of your supply chain network

The first thing you need to do is to get informed about every aspect of your supply chain network. You will become more shock resistant as you get to know all the ins and outs of your value chain. A Value Stream Map is a great tool to keep track of the logistic flows in your supply chain eco-system.

VSP is a visual representation on your logistics value chain, it contains information about everything from your producer and the raw materials, to the shipping companies in Dammam responsible for taking care of the freight to the end consumer.

These maps need to include the costumer side and the supply side of the supply chain. On the costumer side you need to account for who are your costumers or costumer groups and where are they located. After that, you will need to look at your distribution channels and the value chain. From the supply side of the story, you will need to map out who are your suppliers and how does the supply process look like.

When you get a clear view of your end-to-end logistics chain, you can make targeted adjustments to shockproof your supply chain.

Always have a supply chain risk management plan

The second step of this process is to map out all the possible vulnerabilities that you supply chain can be prone to. This is a key step of the process, as it is extremely important to raise awareness and develop important structural insights into the risks of your supply chain.

You will need to do a FMEA, or Failure Mode & Effects Analysis. This means mapping out the internal and external risks of your supply chain. You need to be aware of everything that can possibly go wrong and what are the worst-case scenarios regarding your supply chain organization.  With the FMEA, you can map out your supply chain risks in a structured manner. Estimate what can go wrong, what are the consequences and how can you identify and correct the errors on time.

The SCOR model

One of the most pragmatic ways or assessing the potential risks of your logistic chain is the SCOR model. It is based on the 5 domains of supply chain management: plan (planning), source (purchase), deliver (storage & distribution) and return (return flows).

Freight supply chain
One of the most pragmatic ways or assessing the potential risks of your logistic chain is the SCOR model.

You will need to asses what can go wrong and what are the minimal and maximal consequences. After that, you need to assess are you able to notice the correct errors in time for each of these five pillars.

Planning your purchases

An important notion in the supply chain management sphere is TCO or Total Cost of Ownership. TCO includes not only price and quality of the purchased good, but also a list of other factors. These factors include logistics cost, administrative rules and procedures with its connected workload. Another key phrase is strategic sourcing, or in other words optimizing the price, quality and related costs.

Access to information

Shockproof your supply chain and make sure that you have a clear data flow. With great data integration and information exchange you can guarantee better goods flow from you associates, such as moving companies in Jeddah.

You need to have a clear flow of data to conduct business and shockproof your supply chain.

Interconnected supply chains that have extensive information sharing will be more resilient to shocks. This was demonstrated after the first wave of the COVID-19 crisis. The firms that had extensive data integration with their suppliers before the crisis were the first to reopen and get back to business. Strengthen your supply chains and make them more resilient. Do this by utilizing digital solutions that rely on internet of things, blockchain and big data.

It is extremely important to realise that good information flow affects the flow of goods. Make sure to have constant access to information. This way, you will be in a better position to react to unforeseen events and any other difficulties.

The future

An important aspect of shock proofing your supply chain is being adaptive. The changes in the industry are happening relatively fast. There is a need to be on top of the wave of changes. The future of this field is finding solutions in big data, AI and autonomous vehicles and robotics.

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