Why Supply Chain Resilience is Key to Business Survival
Businesses face challenges from every direction. Whether it is a pandemic, geopolitical tensions, or natural disasters, disruptions are inevitable. Companies that can swiftly adapt to these disruptions are the ones that thrive. But is supply chain resilience truly the only way to future-proof your business? Or is there more to it than just adapting to crises?
In 2022, India’s logistics sector was valued at approximately $274 billion. This market is projected to experience substantial growth, reaching $563 billion by 2030, and expanding at a compound annual growth rate of 9.4%. Interestingly, logistics costs in India account for 14% of the country’s GDP, which is significantly higher than the 11% average of BRICS nations (the bloc of Brazil, Russia, India, China, and South Africa) (1).
This discrepancy underscores the pressing need for businesses in India to adopt more efficient supply chain strategies to reduce costs and enhance overall productivity. So, let’s unpack how supply chain resilience strategies can help your business and explore other avenues that complement resilience.
What is Supply Chain Resilience?
At its core, supply chain resilience is about enabling your business to bounce back from disruptions. It refers to a company’s ability to prepare, respond, and recover from unexpected events without losing momentum. The pandemic showed us how crucial resilient supply chains are, but it also made businesses realize there are layers to that resilience.
Why Supply Chain Resilience is Essential
Let’s acknowledge the vital role supply chain resilience strategies play. Without them, even the most innovative business models would crumble when faced with supply shortages, transportation bottlenecks, or natural disasters.
Here are some businesses that stand out as supply chain resilience examples:
- Dabur: Companies like Dabur, a leading Indian FMCG brand, adjusted their supply chains during COVID-19 by shifting to local suppliers and adopting digital solutions.
- Reliance Industries: By leveraging local manufacturing hubs and advanced technologies, Reliance managed risks in their energy and textile supply chains. During disruptions, the company’s ability to shift production locally helped them maintain supply flow without heavy reliance on international suppliers.
- Flipkart: When the COVID-19 pandemic hit, Flipkart rerouted deliveries and optimized its logistics network using machine learning. This allowed the company to continue operating seamlessly despite nationwide lockdowns, ensuring timely deliveries to customers across India.
- Tata Motors: Another great example is Tata Motors, which implemented an agile supply chain strategy. By diversifying suppliers and adopting digital tools for real-time demand forecasting, Tata Motors managed to reduce lead times and maintain steady production during global semiconductor shortages.
These supply chain resilience examples highlight how businesses pivot and adapt to ensure survival. However, merely building resilience isn’t enough. Let’s explore the broader picture.
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Supply Chain Resilience Strategies
A business needs robust supply chain resilience strategies to prepare for uncertainty. So, how can you craft such strategies for your own organization? Here are some key approaches:
- Diversification of suppliers: Relying on a single supplier can be risky. Diversifying suppliers ensures that your business isn’t left stranded when one source fails
- Demand forecasting: Using AI and machine learning tools to predict demand helps companies stay ahead, especially when market conditions are volatile
- Inventory buffers: Keeping extra inventory might seem like a cost burden, but it could save your business during sudden supply shortages
- Invest in technology: Digital transformation is crucial for a resilient supply chain. Implementing tools like ERP (Enterprise Resource Planning) systems helps businesses track and respond to disruptions in real time
Is Resilience the Only Solution?
While supply chain resilience strategies are vital, they are not the only way to future-proof your business. Here’s why:
1. Sustainability
Resilience alone won’t help if your supply chain isn’t sustainable. Consumers and regulations are increasingly pushing businesses to adopt eco-friendly practices. In India, companies like Tata Steel are investing in green technologies that not only minimize their environmental footprint but also ensure longevity in the marketplace.
2. Innovation
Continuous innovation is another important factor. Businesses that innovate their products, services, and processes can stay competitive and agile, even in difficult times. Companies that fail to innovate are at risk of becoming obsolete, no matter how resilient their supply chains are.
3. Workforce Adaptability
People are as important as technology. Training employees to be adaptable and flexible in their roles will ensure that the entire organization can pivot quickly in times of crisis. A workforce that can manage crises from the ground up will support even the most resilient supply chains.
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Resilience is Necessary, But Not Sufficient
You need supply chain resilience, but it must work hand in hand with other strategies. Let’s take a look at the comprehensive approach successful companies are using:
Key Strategies for Future-Proofing Your Business
- Tech adoption: Invest in technology to automate processes and forecast disruptions
- Agile workforce: Cultivate a flexible and skilled workforce that can handle disruptions with ease
- Sustainability: Implement sustainable practices to meet evolving regulatory requirements and consumer expectations
- Customer-centric models: Build business models that prioritize customer experience and market responsiveness
A staggering 88% of businesses recognize that future sustainability regulations will have a direct impact on their operations (2). However, this acknowledgement reveals a significant gap between understanding the long-term effects of Environmental, Social, and Governance (ESG) policies and the current awareness and readiness to address them. This gap is where supply chain resilience becomes crucial.
By integrating sustainability into resilience strategies, organizations can not only comply with evolving regulations but also enhance their supply chains’ ability to adapt to environmental challenges, reduce operational risks, and position themselves for long-term success.
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An Integrated Approach is Key
AI is revolutionizing supply chain management by improving efficiency, reducing costs, and enhancing decision-making. According to McKinsey (3), AI-powered supply chains can reduce forecasting errors by 20-50%, while lowering inventory levels by up to 20%. AI-driven automation can accelerate supply chain processes by 30%, leading to faster response times and reduced operational costs. Furthermore, Gartner reports that by 2025, 50% of large global enterprises will use AI, advanced analytics, and IoT in their supply chains, driving competitive advantage. AI’s predictive analytics and real-time monitoring optimize everything from demand forecasting to warehouse operations, transforming traditional supply chain models.
Supply chain resilience is vital but it’s not the only way to secure the future of your business. Combining it with sustainability, innovation, and workforce adaptability is crucial. This integrated approach will help your business thrive, not just survive.
Businesses looking to build this comprehensive strategy can gain insights and advanced tools through the IIM Kozhikode Professional Certificate Programme in Advanced Operations Analytics and Supply Chain Management. This programme equips professionals with the knowledge and skills needed to master supply chain resilience and beyond, offering a curriculum designed for today’s complex business environments.
Ready to take the next step? Join the programme in association with Emeritus, which not only teaches supply chain resilience strategies but also prepares you for the next level of leadership in operations and supply chain management.
Write to us at content@emeritus.org
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