Building Resilient Supply Chains

Manufacturers can take a range of actions, including integrating their supply chains for visibility and using digital twins to model supply chain functions, in order to create resiliency.   

The COVID-19 pandemic significantly disrupted supply chains and drew attention to their inherent vulnerabilities. The continuing disruptions have underscored the need to further modernize the foundations of modern supply chains. Strengthening the foundations will not only help manage risk but also position enterprises to weather disruptions seamlessly and even gain advantage from them. Here we will look at two core concepts in successful supply chain transformation: resilience and agility.

The Pandemic’s Impact

The full scope of the pandemic’s disruptive impact on the supply chain is still taking shape, but some salient data points are already available. A cross-industry survey of executives by the World Economic Forum found 76% of respondents pointing to COVID-19 as a significant disruptor of their supply chains and their businesses. The disruptions manifest in numerous ways. For example, nearly two-thirds of manufacturing business and IT executives surveyed by Oxford Economics and NTT DATA said that pandemic-related disruptions were driving significant reductions in their technology investments.

At the same time, the International Labor Organization reported that pandemic-related disruptions to supply chains led to income losses exceeding $3.5 trillion. And the NTT DATA-sponsored 2022 26th Annual Third-Party Logistics Study saw almost one in three shippers and third-party logistics providers citing a net negative financial impact from the pandemic. Developing more resilient supply chains will help curb such impacts of supply chain disruptions going forward.

The manufacturing supply chain encompasses all the activities required to turn raw materials into finished products, such as planning, sourcing, manufacturing, distribution, and returns. As such, resilience is the degree to which supply chain networks withstand disruption and minimize the impact on revenues, costs, and customers. Manufacturers must have the agility required to shift activities swiftly and the data needed to inform such shifts in service of meeting commitments to, and responding to changes in demand from, customers.