Supply chains are diverse and complex, so are the potential risks that could disrupt them. A good supply chain management strategy invests in resilience. Resilience refers to the time it takes supply chains to predict and avoid risk, as well as respond and recover from costly disruptions.
75% of companies experience at least one major supply chain disruption a year.
Supply chains are vulnerable to risk which makes detection time an important metric.
Detection time is the time measured from the instant a supply chain disruption is realized to the time the incident takes place. Detection time is a key factor in supply chain resilience. Companies that quickly identify oncoming disruption are more competitive in the market place. Every day, threats occur that could disrupt standard operations and reduce productivity.
A company can’t eliminate every disruption, but proactive thinking and documented processes can minimize negative financial impact from a halt in operations. Companies should never ignore potential risks – they will not go away. Planning will make a big difference between success and failure.
One approach to overcome disruption is to create a resilient supply chain. The resilient supply chain requires 2 critical components: the capacity for resistance and the capacity for recovery. Resistance is the supply chain’s ability to reduce the impact of disruption, and recovery is the supply chain’s ability to quickly resume normal operations after a disruption.
Many find success in developing a resilient supply chain by segmenting it; segmenting your supply chain creates flexibility by providing you with alternative suppliers and routes.
Ultimately, when an event disrupts business, the supply chain must be able to adjust. A company’s response to disruption is based on its risk management and supply chain management strategy. When the unexpected happens, or when identified risks become real, resilience will overcome the associated challenges.
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