How to build a resilient supply chain

How to build a resilient supply chain

Clear and concise steps for removing risk in supply chain. 1. Mapping the supply chain 2. Buffer capacity 3. Manufacturing diversification 4. Multisourc…
Terry Jeffords

The electronics industry is fast-moving, and having a resilient supply chain can be the difference between success and failure. A resilient supply chain is essential to keeping production on track in an increasingly volatile world of disruptions.

By establishing buffer capacity, focusing on manufacturing network diversification, developing a multisourcing strategy, leaning on nearshoring when possible and using online alternative parts marketplaces (among other things), you can build a more resilient supply chain that will help you meet customer demand and reduce risk in supply chain.

Mapping supply chain

A supply chain is a network of suppliers and customers. It's also a system of processes, people and information that connects suppliers and customers. In order to build supply chain resilience, you'll need to understand the role your own business plays in this ecosystem. And while it may seem like there are many moving parts involved in your company's optimization of supply chain—which there are—the first step toward improving them is making sure everyone involved knows what they're doing at every level.

Mapping a supply chain is a crucial step in optimizing your business operations. To effectively map your supply chain, start by identifying all key stakeholders, including suppliers, manufacturers, distributors, and retailers. Gather and analyze data on each stakeholder's location, capacity, lead times, and inventory levels. Utilize digital tools such as supply chain management software and data analytics to streamline the process. Identify potential bottlenecks or vulnerabilities in the supply chain and develop contingency plans. Consider factors such as transportation costs, shipping routes, and customs regulations. Regularly update and optimize your supply chain map to ensure it remains accurate and relevant.

Establish buffer capacity

As you’re optimizing the supply chain, it's important to identify and build buffer capacity into the system. Buffer capacity is the amount of extra capacity that you have in the supply chain. It can be used for unexpected demand, such as a spike in demand or a major sale event; or for unexpected supply issues, such as an unexpected supplier closure or natural disaster.

To effectively implement buffer capacity, businesses must first conduct a comprehensive analysis of their supply chain to identify potential vulnerabilities and risks. This includes understanding lead times, demand variability, and supplier reliability. Based on this analysis, businesses can determine the appropriate buffer capacity needed at various stages of the supply chain, such as inventory levels, production capacity, and transportation capacity. It is crucial to strike a balance between having enough buffer capacity to handle disruptions and excess buffer capacity that may increase costs. Once buffer capacity is determined, it is critical to regularly monitor and adjust it based on changing market dynamics, demand fluctuations, and supply chain performance. By establishing buffer capacity strategically, businesses can enhance their agility and resilience, ensuring smooth operations even during unexpected disruptions, and ultimately strengthen their competitive advantage in the market.

Focus on manufacturing network diversification

The old adage, "don't put all of your eggs in one basket", holds as true for good supply chain management as it does for children walking home from the market.

  • Diversify manufacturing locations — If one region gets hit by an earthquake or hurricane, it might be off-limits for a while. But if you have factories in different geographical locations and they're all hit at once? You'll still need be able to operate as usual and ship out orders on time.
  • Diversify manufacturing processes — The same goes for different production methods (like mixing up your processes between assembly lines). When some areas are down for repairs after an accident within a factory's walls, others can step in to keep things moving along smoothly so you don't lose any customers due to delays or lack of managing risk in the supply chain.
  • Diversify suppliers — Don't rely on just one supplier for any part of your business—it could eventually cause problems down the road if they don’t deliver as expected due to whatever reason. Having multiple options available reduces risk in the supply chain significantly because there's always another option if something goes wrong with one source supplier.

Develop a multisourcing strategy

The main goal of a multisourcing strategy is to reduce the risk of supply chain disruption. It's important to identify and implement new sources of supply in order to ensure that the company can continue operating even when there are problems with supply chain.

However, it's not always easy to find multiple suppliers for each product you need. Some companies opt for outsourcing: purchasing parts or entire products from other manufacturers. The most successful businesses have systems in place that allow them to quickly switch between suppliers based on price, quality and availability using tools like Amplio. Amplio's BOM tool connects your MPNs in real time to the entire market, unlike BOM tools from distributors like Digikey and Arrow, which look at their own inventory. The upshot is that if your preferred vendor runs out of inventory, you'll have a secondary purchasing option at your fingertips. Moreover, you can proactively and easily switch between vendors to take advantage of cost savings.

It’s also important to consider which parts can be sourced from multiple locations around the world so that your supply chain is resilient against potential disasters abroad like natural disasters or political unrest within countries where you source materials. Again, with a tool like Amplio's, you get this automatically because we connect you to suppliers and manufacturers across the entire world.

While developing this kind of plan for sourcing products may seem daunting at first glance, you’ll find that multi-sourcing strategies aren’t as complicated as they sound.

Lean on nearshoring when necessary

Nearshoring is the practice of outsourcing to a neighboring country that's relatively close by. For example, if you have an electronics company in the U.S., nearshoring would be sending out jobs from your primary American facilities to Mexico or Canada instead of China or India. Rather than searching things like “electric part supplier near me”, check out Amplio’s secondary component marketplace when in need (more on this later).

Nearshoring has become increasingly popular over the last decade due to its ability to provide competitive pricing while still being close enough for frequent communication with vendors and customers alike—and there are many advantages when compared with countries like China or India.

One key advantage of nearshoring is reduced transportation costs and lead times. By locating suppliers or manufacturing partners closer to the home market, businesses can minimize shipping and logistics expenses, as well as shorten lead times, resulting in faster response times to customer demands. Another benefit is increased agility and flexibility. Nearshoring allows for more frequent communication and collaboration with suppliers, enabling quicker adjustments to changes in demand or design modifications. Additionally, nearshoring often results in improved cultural and language alignment, which can facilitate effective communication and reduce potential language barriers. Furthermore, nearshoring can enhance sustainability efforts by reducing the carbon footprint associated with long-haul transportation. Overall, nearshoring can lead to cost savings, increased responsiveness, improved collaboration, and greater sustainability, making it an attractive option for optimizing supply chains in today's global business environment.

Use online alternative parts marketplaces

As the pace and severity of supply chain disruptions increases, every manufacturer needs a solid "plan b" for where they'll get their components. As mentioned above, resilient supply chains don't rely on just one or two distributors - they're plugged into diverse marketplaces where tens or even hundreds of suppliers, manufacturers, and distributors offer their inventory. When one runs out of stock, another comes to the fore.

It can be exhausting trying to stay on top of a large vendor list, but that's what software is for. When a supplier falls through or you can't source a component, Amplio has an online alternative parts marketplace for sourcing spare parts from the world’s leading manufacturers and distributors. It makes finding and buying hard-to-get items easier than ever before by automatically matching the MPNs in your BOM against available inventory across hundreds of sources of supply, and then it recommends the best place to purchase. With our BOM tool, purchasing quality components at the lowest cost is a simple as a few clicks.

The key to supply chain resilience

The key to building resilient supply chains is to ensure that it is flexible and can adapt to changing circumstances. This means that you need to plan for disruptions in advance and ensure that your suppliers also have contingency plans in place. Resilience is only one piece of the puzzle, though - in addition to being ready for disruptions, which is the fundamental strength of resilience, you also need to actively plan for and mitigate risk. To learn more about that, read our guide, "5 Ways to De-Risk Your Supply Chain". Taken together, resilience and de-risking strategies build a supply chain that's ready to excel in our volatile world.

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