Top 10 Ways to Protect Your Supply Chain Against Disruption

Most companies know supply chain vulnerability poses a threat to their operations, yet few perform analysis or plan strategies to minimize risk to the bottom line. Businesses can protect against disruptions by adding supply chain redundancy, says Dr. Jeff Karrenbauer, president of supply chain solutions provider INSIGHT. Here is his advice for strengthening your logistics operations.

1. Perform a supply chain vulnerability audit. Start with your customers and the products they purchase, and work back to raw materials suppliers.

2. Do rigorous "what-if" analysis. Identify situations that could disrupt operations and develop contingencies to overcome these scenarios. Ask questions such as "What if we lose this supplier?" to create a strategic supply chain design that is optimally hardened against disruptions and serves as a cornerstone for a comprehensive business continuity plan.

3. Implement a strategic supply chain plan that mitigates the impact of disruptions. The trend toward lean inventory means many contemporary supply chains are "taut" or "brittle," and therefore vulnerable to disruptions. Reconsider inventory positioning, sourcing, and transportation options to create a more flexible supply chain.

4. Compare the cost of stockpiling inventory against the risk of losing sales and customers, and creating a negative impact on bottom-line profitability. Too much inventory at the wrong location adds to bottom-line costs. Determine optimal inventory policies and levels to sustain your company.

5. Make sure you have multiple transportation plans in place. Ruptured transportation means products and parts face delays in getting to customers. You can continue shipping products to customers—if you have alternative transport plans.

6. Update plans regularly. Factors such as new government regulations or suppliers can cause fluctuations in your company's vulnerability levels. It's vital to put in place consistent programs for updating your supply chain's resilience by reevaluating its design and instituting a corporate culture of security.

7. Create a balance between supply chain network efficiency and operations resilience. Take a holistic view of your supply chain to determine optimal network designs that ensure products are manufactured in the right location at the right time and will ship to the right customers.

8. Put alternative raw materials and manufacturing sourcing plans in place.Strategic planning ensures companies have alternative parts and supply sources, along with balanced inventory levels.

9. Develop mitigating strategies from the C-level. CFOs and others involved in corporate risk analysis and reporting need to take a realistic view of business risk from unimaginable real-world events, which have a very real probability of occurring.

10.Design long-term strategies as well as responses to short-term disruptions. These include critical location, customer, capacity, raw materials, and crisis response analysis.

Source: Inbound Logistics ; By: Deborah Catalano Ruriani 

Is an in-house TMS right for you?

In order to gain more control of supply chain operations, an increasing number of mid-cap companies are investigating the benefits of an in-house Transportation Management System (TMS).   An in-house TMS gives executives a sense of consistency in processes, compliance, and technology integration.  However, all of the risks and costs that come along with owning a TMS are not solely realized at the initial time of purchase.

Purchasing a TMS requires an initial large capital investment, before seeing any benefits. This initial investment is typically used to cover associated licensing fees, employee training, system infrastructure, system maintenance, support, integration of suppliers, carriers, and any other third parties involved.

As with any technology bolt on solution, ERP upgrades, data warehouse integrity, web portal compatibility, and ease of vendor solution updates must be considered.  However, a key question often overlooked is asking: “What areas of my business will a TMS touch?”.  With so much diversity among transportation suppliers in today’s market, no one solution can remain accurate, timely, and reliable across all silos of your business without continual communication maintenance and point of sale reprogramming.

Silos within your business typically affected include Customer Service, Accounts Payable, Procurement, Distribution, and Management.  Companies who purchase TMS Packages with the goal of a six month to two year return on investment quickly realize that a support team must be established around the technology in order to advance towards the desired ROI.  If an ROI is ever truly achieved, it is almost always well beyond the target date.

Many organizations only plan to invest and reconstruct their network once a year. The initial large capital investment leaves the purchaser feeling extremely overwhelmed and burdened by the system that they bought to alleviate their costs and make their business better, faster, and smarter.  Purchasing a system that doesn’t fit into your business could result in continually investing money into a sinking ship.

Inbound Logistics

Manufacturers spend a tremendous amount of time, resources, and energy on the outbound distribution of their products. Strategic initiatives to drive process improvement, risk avoidance, carbon abatement, and cost reduction are all designed to create a more efficient, cost effective, and quality delivery. That makes a lot of sense, after all delivery is the final step in supplying your customer.

Unfortunately, there are often very few resources invested in the inbound transportation of raw materials creating a large gap in the supply chain. Managing inbound logistics may take a back seat to outbound distribution, but with the right technology and co-management support there can be enormous gains. With the right systems in place, a company can drive vendor compliance of carrier resources and measure results through high-level metrics.

Utilizing a technology-enabled solution removes the ‘guess work’ and guides your vendors to make the best routing decision for your business. The financial impact can be significant. Additionally, gaining real-time visibility of the inbound flow of raw materials will be a critical component for planning and operations for any manufacturer.

Is Logistics a Necessary Evil?

Logistics is sometimes messy. There are a ton of moving parts affecting many different silos within an organization beyond the inbound and outbound flow of goods. Consider for a moment the people within your company who are responsible for customer service, and how logistics impacts them and your customers. In an environment that lacks automation and visibility of the supply chain, logistics can be over-run with manual processes and an enormous challenge to control, which in turn can negatively impact your customer’s buying experience. If you’re like most companies, you operate in a highly competitive environment. With the right technology and systems, logistics can and should be a competitive edge, not a necessary evil.