Building resilience and contingency into your supply chain is not a nice to have - it's a must have in a global economy
2024 has been challenging for any business relying on global supply chains. A global economy creates a higher reliance on international trade and supply chains, and with that a greater dependence on freight partners and logistics solutions that enable the efficient movement of goods.
The global pandemic of Covid-19 had a profound affect on supply chains that exposed their vulnerabilities and created pressure for better contingency planning as well as a drive for better domestic production and minimising reliance on just in time or lean manufacturing strategies.
Logistics and supply chain professionals are now recommending that companies should diversify their supply base and logistics solutions, highlighting the ‘all eggs in one basket’ approach to moving freight through the supply chain could have a devastating impact.
Another year of logistics challenges
Just take a look at the events of the past year, from the Red Sea Crisis and the attacks on shipping vessels by Houthi militia. Carriers continue to be targeted, and not just the commercial ships tied to Israel, USA or UK.
The more recent attacks on Greek-owned shipping companies, which represent one of the largest fleets in the world, according to Reuters, is increasing the impact it is having on global trade.
Add in the recent port strikes along the East and Gulf Coast of America, the bottlenecks begin to increase and delays to production lines and product availability become exasperated.
And it’s not just geopolitical events creating these challenges, the environmental impacts and rise of extreme weather events will affect every mode of transport, as well as more advanced supply chain challenges such as cyber-attacks and IT outages such as the CrowdStrike event in July.
Creating resilient supply chains
In an age where disruptions to the supply chain is becoming the norm it is important that they have the ability to recover quickly and therefore become more resilient through the process.
One of the topics around creating resilience is to diversify the supply chain, creating a variety of sources for manufacture and sourcing. This may seem counter-intuitive, particularly when managing costs and seeking economies of scale that can only be achieved with high volume orders and production, but it could be the best way to minimise disruption.
The best way to understand where you need to create or improve resilience is to increase visibility of your supply chain.
Audit and risk management
Mapping out your supply chain visually and conducting a risk assessment is a great way to start the audit process. You will soon be able to identify where technological, environmental or geopolitical risks will impact your supply chain. There are many mapping and risk assessment tools available online. Knowing what your supply chain actually looks like enables you to identify hot-spots that need addressing, or facilitate discussion with any outsourced providers, or logistics partners.
Contingency planning
What happens when everything you have planned and risk assessed still throws a curve ball into your supply chain? A cyber-attack or a global pandemic has the potential to cause businesses to shut down. An essential aspect for managing any supply chain disruption is having a back-up plan to all the risks you have identified in your audit.
Understanding the impact of the risk through business impact analysis enables you to identify preventative controls and strategies as well as carrying out tests on the process. Contingency planning in supply chains requires an ability to call on stable partnerships who can support you and your business when the plans are knocked off track. It also requires securing critical data, ensuring key stakeholders are informed quickly and partners are consulted with – including the customer.
Finally, timing is everything – it is essential to create a timeline and cosument the immediate response and outline long-term strategies to prevent future disruptions.
Strong relationships
Strong relationships with your customers and your supply chain is paramount to overcoming the inevitable challenges you will face at some point in your supply chain. When an event occurs, keeping an open and transparent line of communication with your customer matters.
But it shouldn’t stop there.
If you outsource logistics, lean into your partnerships. If you don’t have a partnership, now is the time to create one. Freight forwarders, logistics companies, and hauliers have a unique insight into what happens ‘out on the road’ and are negotiating supply chain disruptions often on a daily basis. That intel drives supply chain ingenuity and contingency planning with just as much frequency. Any challenge your business is facing, is one that has probably been dealt with before.
Associate Director at Baxter Freight, Dan Myers, oversees some of our most complex supply chain solutions and is a strong advocate for creating partnerships with customers as it provides the necessary insights into the current supply chain and develop new practices that can be created in collaboration that protects the supply chain and mitigates any adverse conditions.
“The only way to offer the best logistics services is to really get to know the business we are working with and that takes time. But it’s time well spent and can pay off dividends for the long term.
One of our key customers, a multinational organisation that designs and manufactures in the power solution sector, used to move goods via the Dover – Calais crossing into Europe, including destinations in Northern Europe, the Nordics and Scandinavia.
This route suited the processes of the existing logistics provider and wasn’t necessarily tailored to the customer’s needs. It was only by understanding the needs of the client and their customer base through conversations with the factory, their logistics team and their sales operation, that we recognised alternative services could implemented.
By utilising the port of Immingham and Hull, goods could be routed on a more cost-effective and operational efficient method via weekly sailings into these territories, improving service and customer experience.”
Review and update the supply chain
Supply chains are dynamic; technological evolution, environmental and geopolitical events are happening all the time, so ensure your organisation can respond to that with as much pace.
Review and update your supply chain map and risk assessments at the very least on an annual basis, but preferably have a frequent contingency and planning audit in place. Be sure to collaborate with key stakeholders as your plans evolve so when the unexpected happens, you have a team who are in your corner.
Are you looking for advice on shipping goods globally?
For more insights and support into your own supply chain please contact our team of Solutions Architects who can help you mitigate disruptions in your supply chain.
