The resilient supply chain: adapting to uncertainties
Now more than ever, resilience and adaptability are key. To delve deeper into this topic, we had the unique opportunity to speak with Jack Pool, Business Development Director of Supply Chain & Logistics at Haskoning. Through his wealth of experience, we explore the vulnerabilities, risks, and strategies shaping resilient supply chains' future.
Understanding supply chain vulnerabilities and risks
Supply chains face numerous vulnerabilities and risks, often resulting from external forces such as natural disasters, political events, and demographic changes. For instance, production facilities and warehouses can be disrupted due to strikes, floods, hurricanes, earthquakes, or political events like elections. A recent example is the temporary closure of factories in Nigeria during elections.Moreover, the availability of raw materials is becoming a significant concern. They can either be unavailable or arrive late due to supply chain issues. Weather-related events such as droughts and heavy rains can significantly impact the supply of raw materials, affecting the reliability of crops and, subsequently, the entire supply chain.
External forces like natural disasters and political events often disrupt production facilities and warehouses, impacting the supply chain and causing raw material shortages.
Building strong relationships
Companies must foster collaboration and build strong relationships with suppliers, customers, and other stakeholders to enhance supply chain resilience. This requires a cultural shift towards collaboration, transparency in communication, and effective data sharing. A study reveals that only 11% of US, China, and Taiwan supplier sites are fully prepared for climate-related disruptions.The importance of communication at different levels
Strategic, tactical, and operational levels of communication are crucial. On a strategic level, companies must share their plans so stakeholders can prepare accordingly. On a tactical level, backup scenarios should be discussed, such as what actions to take if a supplier goes bankrupt or experiences a disruption like a fire. On an operational level, companies need contingency plans for immediate issues, such as rerouting goods if a hurricane affects a port.Predicting and preparing for future challenges in supply chains
Looking ahead is crucial for building a strong supply chain. For instance, data indicates that drought will become more significant in the next five to ten years. Predictions for Europe show alarming trends, with countries like Spain potentially becoming desert-like due to increasing temperatures. The IPCC report states that human activities have caused approximately 1.1°C of global warming above pre-industrial levels, likely ranging from 0.8°C to 1.3°C. If current trends continue, global warming is expected to reach or exceed 1.5°C within the next two decades.Drought will become even bigger in the next five to ten years. Predictions for Europe are alarming. These changes will impact the reliability of supply chains and the availability of crops.
The role of emerging technologies
To help mitigate the consequences of global warming, emerging technologies like predictive digital twins, artificial intelligence (AI), predictive simulation, and machine learning are shaping the future of supply chain resilience. These technologies enable companies to identify patterns, forecast crises, and minimise disruptions.For instance, combining network design with risk information allows companies to decide based on potential risks. AI can also play a role in a real-time immediate reaction, helping companies prepare for geopolitical issues.
Applying predictive analytics
Predictive analytics can also be applied to improve supply chain resilience. For example, network design software can provide insights into all the locations of a supply chain network. This data can then be combined with risk data on factors like droughts, fires, earthquakes, and geopolitical issues. The risk factors can then be quantified and used to create scenarios with the lowest risk, which can be compared with optimal cost scenarios.Case studies: resilient supply chain management
There are numerous examples of companies that have successfully enhanced their supply chain resilience. Let's take a look at some of our real-world case studies:Highly accurate simulations optimise food company productions’ site
This case study showcases the use of predictive simulation in the fast-paced and ever-changing food industry. With the pressure to adapt and manage change critical to success, predictive simulation enables quick decision-making without impacting production or supply chain delivery. This approach leads to smarter, risk-free business decisions and increases investment returns.
Long-term partnership in pharmaceutical’s strategic ambitions
This case study highlights a long-term collaboration with a pharmaceutical company. We helped develop a strategic vision for the company's future, illustrating how collaboration and strategic planning can enhance supply chain resilience.
These case studies provide valuable insights into how companies can create a stronger supply chain amid uncertainties and disruptions. They highlight the importance of strategic planning, agility, collaboration, and the use of technology in building resilient supply chains.
But it's not just about overcoming challenges; it's also about seizing opportunities. A resilient supply chain can help companies navigate disruptions, take new opportunities, innovate, and gain a competitive edge.
But it's not just about overcoming challenges; it's also about seizing opportunities. A resilient supply chain can help companies navigate disruptions, take new opportunities, innovate, and gain a competitive edge.
Building a culture of resilience in supply chain management
Creating a culture of resilience within an organisation can be challenging. Change management is complex, and changing the culture is intensive and time-consuming. It requires a top-down approach, agility, fast decision-making, and a mindset shift towards thinking in scenarios.Moreover, companies need to work closely with their suppliers and customers. This requires breaking down the traditional boundaries between what is shared with suppliers and customers to enhance supply chain resilience.
Creating a culture of collaboration is crucial for supply chain resilience. This requires transparent communication and effective data sharing.
