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Supply Chain Industry Updates

6 Bright Ideas from Gartner, and Dad

“And when you’re done with that, you can clean your room and fix your supply chain.”

Here’s a late Father’s Day thought for you: Did your dad ever tell you that “nothing worth doing is easy?” He might have been reacting to the teenage you complaining about having to mow the lawn, or some other equally pernicious task. But, as it turns out, the old man was a supply chain genius in his own way.

See, everyone in our coronavirus-battered world seems to agree that improving visibility up and down the supply chain, and being able to react rapidly to change, are where we should be headed. But, as an HBR article reminded us this week, “Building Resilient Supply Chains Won’t Be Easy.”

It’s hard to change a system that worked pretty well for most organizations for many years, barring the occasional mega-disruptor like a trade war, natural disaster or pandemic. “Most supply chain leaders recognize that becoming more resilient is a necessity in the current environment,” says Geraint John, a vice president and analyst at Gartner. “However, measures such as alternative factories, dual sourcing and more generous safety stocks go against the well-versed philosophy of lean supply chains that has prevailed in recent decades.”

To help you prepare for the task ahead, Gartner suggests you consider these 6 strategies:

  1. Build inventory and capacity buffers — “The challenge is that buffers are expensive, and supply chain leaders may have a hard time justifying them to the c-suite,” Gartner admits. That brings to mind another observation: The most-successful supply chains tend to have the CEO’s engagement. Is your CEO onboard with your ideas?
  2. Diversify your manufacturing network — People recognize that relying on suppliers in a single country is very risky; however, doing something about it can be a hard sell in the c-suite, too. But, as John observed, “Disruptions to supply chain operations have intensified in the past few years. This means that the cost of retaining multiple supply locations must be seen more as a cost of doing business, rather than an inefficiency.”
  3. Multisource — To do this successfully, Gartner points out that a supply chain leader must know their supplier network “in detail and be able to categorize suppliers not just by spend, but also by revenue impact if a disruptive event occurs.” Does that describe you?
  4. Nearshore –– This requires you to balance shortened lead times vs. the expense of working with more partners.
  5. Harmonize your platform, product or plants — An example is found in the automotive industry, where it’s not uncommon to share vehicle platforms across multiple models.
  6. Form “ecosystem partnerships” — Your company doesn’t have the scale to support multiple locations? Gartner recommends you buddy up with 3PLs and contract manufacturers to diversify your production.

Of course, all of this is easier said than done. But it gives you plenty to think about as you try to bring more resilience to your supply chain. Now, about that grass that still needs trimming …