Supply Chain – Efficiency v/s resiliency
The debate on supply chain efficiency versus supply chain resiliency is not new. When times are good, the pendulum shifts decisively towards efficiency, often at the cost of resiliency. Much benefit in terms of cost and efficiency accrued over the last three decades due to globalization of supply chains. However, experts point out that excessive focus on efficiency may have led to global supply chains becoming inelastic and fragile – the trade wars, Covid-19 pandemic and the war in Ukraine clearly exposed some of the fundamental weaknesses of supply chains.
Over the last few years, the calls for supply chain resiliency and provision of real time and actionable risk intelligence pertaining to supply chains have gotten louder. In particular, the supply chain leaders of American and European companies are much stressed about their supply chains originating from Asia.
Industries across sectors – BFSI, travel & hospitality, automotive, healthcare, pharmaceuticals & biotech, IT & electronics, manufacturing, food & beverages, apparel – have been impacted by supply chain breakdowns due to production stoppages, travel and movement restrictions, logistic bottlenecks (airspace restrictions, seaport blockages & container shortages), limited/non-availability of raw materials / inputs, sanctions, and trade restrictions.
Governments are now working overtime to relocate strategic supply chains of national importance, while global corporations are trying to adopt one or some of the following resilience-building strategies:
- Regionalization
- Localization
- China plus one – Vietnam, Taiwan and India are major beneficiaries.
- Diversification of suppliers
- Reshoring or friend-shoring
- Contingency planning / provision of inventories
- Digitization of supply chains
- Supply chain risk monitoring, risk alerts, and risk advisories
- Supply chain risk intelligence platform
- Supply chain integrity due diligence
With these strategies in place, companies’ prime objectives such as having abundant availability of infrastructure and skilled labor, suitable geographic location and proximity to markets, political and socio-economic stability, favorable currency, tax and policy environment, and more are well secured. However, some level of risk of geo-political tensions, economic sanctions & export controls, fragmentation/breakdown of global trade systems, natural hazards, supply chain bottlenecks, and cyber-attacks remains omni-present.
Real-time knowledge and awareness of Supply Chain Risk Intelligence, vulnerabilities and risks can provide your organization an extra level of protection to maximize supply chain efficiency as well as resiliency. MitKat’s services can keep you updated and on guard with the help of supply chain risk intelligence platform.