Turbulent times can reveal weaknesses in supply chains, accentuate bottlenecks and reduce access to critical components, suppliers and capital. The ability to respond quickly and effectively to change depends on various business assets and capabilities: replacing or increasing sources of supply in response to partner inventory issues or trade war-induced tariffs or restrictions, and in place Agile manufacturing processes that reduce redundancies and optimize product inputs.
Each thread in this complex web of factors that affect supply chain resilience must be examined and assessed separately to identify and mitigate potential vulnerabilities. At the same time, most of this web is simplified to two main lines, capabilities common to all resilient businesses: increasing visibility and maintaining sufficient diversity in the supply chain.
Ability 1: knowledge
Develop data capabilities and analytical tools ranging from suppliers and partners across the value chain to end customers, enabling companies to anticipate and prevent supply disruptions.
Ability 2: agility
Being able to quickly mobilize an effective response to disruption means managing a large ecosystem of suppliers across all dimensions of the supply chain.
As digitization is a key driver of supply chain resilience, companies are looking for approaches to measure and compare their digital infrastructure and processes. The Kearney Resilience Stress Test assesses supply chain resilience across eight dimensions that cover a company’s own processes, as well as those of suppliers and partners, measuring the degree of critical digitization in each. These include the use of IoT sensors in logistics or fulfillment operations, the automation of robotic production or distribution processes, and analysis and machine learning in production centers, management of stocks and financial capital management.
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Using his stress test to analyze and assess the supply chain resilience of dozens of global organizations across multiple verticals, Kearney found that leading practices in each dimension focus on an organization’s ability to take advantage of information from its tools. and management processes and respond with agility, thanks to flexible processes, communication with ecosystem partners and lean decision-making.
Best practices run across the gamut of verticals, although some capabilities occur more organically in some organizations than in others. Technology and consumer goods companies, for example, often have better capabilities to manage supplier complexity. Technology companies often develop products and solutions with large sets of components or vendor inputs, and consumer goods also manage large portfolios of vendors. Likewise, companies in sectors with traditionally complex and lengthy production processes, such as pharmaceuticals and chemicals, tend to score higher in the manufacturing dimension of frames.
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