Uncertainty is the norm
In a business environment where uncertainty has become the norm and disruption is commonplace, resilient supply chains allow companies to remain agile, adapt to change, and respond very quickly when threats arise.
And while responding effectively to supply chain threats isn’t a new discipline — after all, companies have been facing business continuity threats for decades if not centuries — the interconnectedness of companies across the supply chain has become tighter in recent years.
Add the global nature of the modern-day supply chain to the equation and the need to focus on attaining and maintaining supply chain resilience becomes even greater. Not all companies recognize this fact, nor do they connect the dots between their own financial health and the strength and resilience of their global supply chains.
Focused largely on risk management (i.e., identifying potential risks in advance, analyzing those problem areas, and then taking precautionary steps to reduce the risk), organizations don’t think about what they’ll have to do to recover from the risk
and continue operating in a productive and profitable manner.
“Risk management as a standalone discipline is extremely important, but it’s only one piece of the business continuity puzzle,” says Rose Kelly-Falls. “Without a well-defined recovery plan, the probability that an organization will be able to operate in the aftermath of a supply chain interruption, natural disaster, or other event decreases significantly.”
Companies that are paying attention to this issue quickly learn that a continuity plan is only as good as the suppliers that drive and support the organization’s business. Much like both Chipotle and The Centers for Disease Control and Prevention learned recently, not only is pinpointing the specific culprit difficult, but going through the motions of investigating multiple suppliers around the country can be a futile exercise.
That’s not to say that it can’t be done, but it does require a thorough review not only of Tier 1 suppliers, but also Tier 2 and Tier 3 — and their suppliers as well. This is a critical point because if something should go wrong with a supplier’s downstream suppliers, the ripple effect will extend all the way to the top.
According to Kelly-Falls, organizations that are serious about supply chain resilience must put a detailed plan in place for identifying potential supply chain disruptions and the related recovery strategies.
“This takes time, resources, and cross-functional input from legal, manufacturing, finance, IT, logistics, and everyone else who is involved with strategy development,” says Kelly-Falls. “Supply chain resilience can’t just be lip service, everyone has to be involved, onboard and sharing input for it to work properly.”