Why does supply chain resilience matter?

Why does supply chain resilience matter?

Resilience helps managers adapt quickly and mitigate supply chain management risks without sacrificing profitability or sustainability along the way.
Terry Jeffords

The world of manufacturing is changing and demand for a competitive edge has never been higher. But this competitive landscape brings with it new challenges. For example, customers want to know that their products are going to be available when they need them and at the price they expect. So, manufacturers must be able to work with electronics parts suppliers who can deliver quality goods (i.e. semiconductors, PCBs, Rheostats, etc.) consistently in order to meet this demand and mitigate supply chain management risks.

Supply chain resilience is no longer a nice-to-have. It’s a necessity.

In the past, supply chain resilience didn’t always need to be top of mind. With an ever-changing global landscape, maintaining a resilient supply chain is essential to providing high-quality experiences. As the world becomes more and more interconnected, events in faraway places affect businesses across the globe. The massive opportunity of globalization comes with more frequent disruptions, so you need a resilient supply chain that can adapt to volatility, take advantage of new opportunities, and ride out challenges.

Why? The answer lies in the rapid expansion of globalization, which has increased competition and technology adoption across industries—and it continues to do so at an even faster pace today than ever before as markets become more competitive and customer expectations rise. Supply chain resilience helps businesses navigate the increasingly complex environment of supply chain strategies so they can adapt quickly enough to stay competitive and relevant in their industry segments without sacrificing profitability or sustainability along the way.

Leaving out the elephant-in-the-room of COVID-19, there are a ton of recent examples of big global supply chain challenges:

  1. Suez Canal Blockage: In March 2021, a massive container ship named Ever Given ran aground and got stuck diagonally across the Suez Canal, one of the world's busiest shipping routes. The blockage lasted for nearly a week, disrupting global trade as hundreds of ships were unable to pass through the canal, causing delays and rerouting of shipments, and impacting the supply chains of various industries.
  2. Texas Winter Storm: In February 2021, a severe winter storm hit Texas, USA, causing power outages and disrupting critical infrastructure, including oil refineries and petrochemical plants. This led to disruptions in the production and transportation of oil, gas, and chemicals, affecting global supply chains for various industries dependent on these resources.
  3. Semiconductor Chip Shortage: A global shortage of semiconductor chips, used in various electronic devices such as smartphones, computers, and automobiles, has been ongoing since late 2020. The shortage has been attributed to a combination of factors, including increased demand for electronics during the pandemic, supply chain disruptions due to COVID-19, and geopolitical tensions. This has resulted in production delays and increased costs for industries reliant on semiconductor chips, impacting global supply chains.
  4. Port Congestion: Several major ports around the world, including those in Los Angeles and Long Beach in the United States, experienced congestion and delays in 2021 due to a surge in shipping demand and disruptions caused by the pandemic. The congestion at ports has led to delays in unloading and processing shipments, affecting the flow of goods and disrupting global supply chains.
  5. Trade Disputes and Tariffs: Ongoing trade disputes and imposition of tariffs between major economies, such as the United States and China, have disrupted global supply chains. These actions have led to changes in trade policies, increased costs, and uncertainties, resulting in disruptions in supply chains as companies re-evaluate their sourcing strategies and seek alternative suppliers.

As you can see, the only constant in supply chains is disruption - that's why you need resilience.

Supply chain resilience is key to success in today's manufacturing environment.

Supply chain resilience is a critical factor in manufacturing success as it helps manufacturers to navigate disruptions, ensure a consistent supply of materials, enhance flexibility and agility, improve risk management, and enhance customer satisfaction.

One of the key benefits of a resilient supply chain is its ability to minimize disruptions. Supply chains can face various disruptions such as natural disasters, geopolitical tensions, labor strikes, or transportation disruptions. By having alternative sources of supply, redundant production capabilities, and contingency plans in place, manufacturers can minimize the impact of disruptions and maintain business continuity. This helps avoid costly production delays, stockouts, or stoppages that could negatively impact customer orders, production schedules, and overall business operations.

In addition, a resilient supply chain ensures a consistent and reliable supply of materials, components, and parts required for manufacturing. This helps manufacturers avoid stockouts, production delays, or stoppages that can result in customer dissatisfaction and lost business opportunities. Having a dependable supply chain with diversified sourcing options and a robust supplier base enables manufacturers to have the necessary materials at the right time, in the right quantity, and of the right quality to support their production operations.

Supply chain resilience also enhances flexibility and agility, which are crucial in today's dynamic business environment. A resilient supply chain allows manufacturers to quickly respond to changes in demand, market conditions, or supply disruptions. This can involve having multiple sourcing options, adaptable production processes, and a flexible distribution network. The ability to quickly adjust sourcing, production, and distribution strategies in response to changing customer needs or unforeseen disruptions enables manufacturers to maintain their competitive edge and seize business opportunities.

Furthermore, a resilient supply chain improves risk management. Proactive risk management, including supply chain mapping, risk diversification, and robust contingency plans, allows manufacturers to anticipate and address potential risks and vulnerabilities in the supply chain. This helps in reducing the likelihood of disruptions and their potential impacts. Effective risk management strategies enable manufacturers to proactively identify and mitigate risks, safeguarding their supply chains and protecting business continuity.

Lastly, a resilient supply chain contributes to enhanced customer satisfaction. By consistently delivering products to customers on time and as promised, manufacturers can build customer loyalty and positive brand reputation. A resilient supply chain allows manufacturers to meet customer demands, fulfill orders promptly, and maintain customer satisfaction levels. Satisfied customers are more likely to be repeat customers, resulting in increased customer retention and business success.

Amplio will boost your supply chain's resilience

Amplio doesn't just help you when issues occur - it'll build your resilience before they happen.

The Amplio BOM tool constantly monitors inventory levels and restocking dates across the entire marketplace and compares them to your MPNs and production needs, and then it provides early warning for shortages. When inventory levels start dropping, we'll alert you of "Near Shortages" that can be headed off by smart supplier adjustments. If you can't change suppliers, or if the part is dropping out of stock everywhere, we'll work with you to identify form/fit/function alternates so that you can swap to a more readily available component.

Sometimes, though, all of that fails. No one can completely avoid shortages; when they hit, our supply chain experts from our PartSecure solution will leap into action and find inventory on the secondary market for you.

With our tool, you'll have the information, recommendations, and guidance you need at your fingertips to make smart decisions for a more resilient supply chain - and you'll have the help you need to react quickly when things go south.

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