January 2015 | Commentary | IT Matters

Supply Chain Resilience: Turning Risk Into Opportunity

Tags: Supply Chain Management, Risk Management, Logistics

Rich Becks is General Manager, Industry Value Chains, E2open, 650-645-650

In today's global economy, risk is unavoidable. But it also provides opportunity, as a company's ability to adapt in difficult circumstances is a true source of competitive advantage and precisely defines a winning approach to risk responsiveness.

Is your business prepared to mitigate the effects of operational risks, such as Mother Nature throwing a curveball your way, or a sudden demand spike? Managing supply chain risk means recognizing that things won't always go according to plan, and having the right infrastructure in place to succeed even through the unexpected.

Shoring Up Your Supply Chain

Highly resilient supply chains should have these three qualities:

1. Multi-tier visibility. Successful programs function end-to-end. Having data visibility across your extended supply chain network at every tier enables early warnings about disruptions across the extended trading network. An early warning allows you to mitigate supply disruptions before operations and performance are negatively impacted.

Enabling real-time visibility and alerts across multiple tiers requires the right technologies, expertise, and commitment from senior management. The right level of visibility lets companies and partners see information simultaneously, moving decision-making into the network.

2. Real-time collaboration. External collaboration helps manage the response when the unthinkable happens. Without collaborating outside the four walls of the enterprise, contingency plans are isolated from key suppliers and distributors, prolonging recovery efforts and disappointing customers.

Real-time collaboration in the event of large-scale shutdowns or inventory losses enables companies to switch among alternate suppliers, and match short-term demands with order information. Knowing the options and acting immediately makes all the difference in market share as the industry recovers.

3. A flexible response plan. Supply chain disruptions cannot always be predicted, so evaluating potential outcomes well before they actually occur can make or break a response plan.

Risk management processes provide the information and communication platform needed to assess and manage situations as they occur. Teams must be able to quickly determine which supply is affected, the products containing those components, the location of inventory within the whole network, and options for alternate supply.

A unified view of data empowers partners to expedite, transfer, or reroute existing assets wherever demand occurs. This means fewer parts shortages, stockouts, and delayed deliveries—and improved service levels to match, ensuring high levels of customer satisfaction.

Ready for Anything

Natural disasters and other large-scale disruptions leave no time to re-plan, so supply chains must be poised to shift direction instantaneously. This quick response depends on a company's ability to identify risk probabilities, prepare recovery scenarios, adjust plans based on unexpected demand surges or shortfalls, and change supplier capabilities when the unexpected happens.

This delicate balance between planning and response is fueled by data-rich technology that affords the right levels of visibility and collaboration throughout the supply chain, and ultimately positions organizations to turn an unforeseen challenge into a game-changing opportunity.