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Cost Optimisation
February 6, 2024

A Strategic Guide To Building A Resilient Supply Chain

Explore how to build resilient supply chains with Holocene's strategic guide, focusing on inventory distribution and more
Romain Fayolle

All companies want to build a dependable supply chain that consistently meets their customers' needs without fail. For this, the supply chain must have its own fail-proof mechanisms. A robust supply chain can anticipate demand variations, quickly react to disruptions, and rapidly recover from unplanned changes.

Building a resilient supply chain is now a success parameter, and it is not a one-time or one-size-fits-all solution. It's a multi-dimensional framework and dynamic process that ought to build layers of fail-proof systems to safeguard the supply chain in severe situations and ensure business continuity.

Listed here are five such strategies for steering supply chains through tough times:

Five Ways to Build A Resilient Supply Chain

In the last 3-4 years alone, COVID lockdowns, near-shoring policies, floods, labor shortages, high inflation, and wars have occurred during difficult times. Imagine a business selling in the EU but purchasing from China. Almost all these black swan incidents would have affected their supply chain. Such back-to-back blows were fatal for many companies that didn't focus on building resilience in their supply chains.

Hence, the strategy in 2024 should be building a supply chain with Murphy's law in mind. Here are five supply chain strategy elements to help safeguard your company in difficult times. Although a few of the options below will have trade-offs against the higher costs, these recommendations are focused on building supply chain resilience as their primary goal.

  1. Distribute Inventory Between Facilities

What if your main warehouse suddenly fails due to a pandemic, staff shortages, or other natural catastrophe? This is far more common than most realize, and the last three years present the best evidence.

Keeping inventory across several fulfillment centers gives you greater geographical reach while lowering shipping fees and transit times. It also provides a cushion of fulfillment if one of the facilities fails. This strategy leads to a higher inventory cost due to the multi-echelon network setup. But the trade-off is between higher costs vs. better service levels and reliability.

  1. Leverage Real-Time Data

Real-time visibility into your supply chain can completely transform almost all functions, like demand planning, inventory management, supply planning, and logistics, and help build a framework to get the latest information.

With real-time data, companies can adjust inventory levels to get the right safety stock without sacrificing profits. Deliveries can be planned more efficiently, considering the real-time data on demand and traffic conditions. Capabilities like demand sensing and demand shaping have already been proven successful in reacting to near-term demand changes.

  1. Diversify Your Supplier Base

If your supply chain depends only on a single supplier or multiple vendors but in a specific geography, your supply chain might get exposed in a crisis. Many companies were impacted during the COVID lockdowns since their major supplier was based in China. Now, almost all the companies have started to follow the China + 1 policy.

Working with several suppliers in different geographies reduces the risk of your top supplier failing and disrupting your company's supply chain. Fair share allocations should be transparently done with the suppliers to ensure long-term relationships. This way, business continuity can still be ensured by changing to another supplier in case of an adverse event.

  1. Advanced Scenario Planning with Digital Twins

A crucial element associated with a resilient supply chain is scenario planning. It entails building different scenarios - from disasters to economic cycles - and developing backup plans for each. This strategic insight allows businesses to react effectively and quickly should there be disruption.

Scenario planning has now reached a new level because of the digital twin. A digital twin is a digital version of the physical supply chain that reproduces every detail, from stock levels to delivery steps. This enables companies to evaluate the possible impact of scenarios for deeper insights and precise forecasts. Digital Twins save time, effort, and money. The supply chain managers can validate their plan Bs before executing them on the ground.

  1. Look for Advice from the Supply Chain Experts

Very often, an outsider's perspective reveals insights that inner teams might not have even considered. Access to an effective supply chain and tech infrastructure and a knowledgeable team are important to optimize your supply chain. With a partner like Holocene, you get data and supply chain experts on demand.

Fueled by Holocene tools and experience, the strategies that we discussed above can help defend your supply chain. From inventory optimization to data and insights, Holocene allows you to meet up with the supply chain challenges of the contemporary global supply chain.

Creating a resilient supply chain is a process in itself - it requires preparation, equipment, and an adaptable and learning mentality. This journey is why Holocene is the ideal partner - offering the tools, information, and insight to develop and sustain a supply chain that stands the test of time and uncertainty. Take advantage of resilience with Holocene and transform your supply chain into a resilient, flexible, and future-ready asset. Reach out today to understand how.

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