Building Supply Chain Resiliency

Author: Rene Garcia


Every business understands that risk is inherently a part of all supply chains. As such, measures must be taken to mitigate that risk by partnering with vendors, contractors, and suppliers who themselves take a proactive approach to managing risk. Supply chain risk management solutions such as those provided by Avetta can help identify the right partners to reduce the potentiality and the impact of a supply chain disruption. In this manner, an organization builds supply chain resiliency.

What is Supply Chain Resiliency?

First, it is important to define resiliency by itself, which is the quality of resisting or recovering from difficult circumstances. In terms of a supply chain, resiliency is better defined as how effective the system can prevent or contain a disruption by using sustainable business practices. Supply chain resiliency is also defined by how well the supply chain can restore performance after the disruption. Supply chain risk management software can be a great tool for finding resilient partners.

Why is Supply Chain Resiliency Important?

The Business Continuity Institute recently released a study of organizations across 64 countries regarding supply chain disruptions. The reported economic impacts were chilling. Of the 526 respondents, 34% reported losses of at least one million Euros due to supply chain disruptions, with 9% reporting losing that amount due to a single incident! Worse yet, 43% did not insure supply chain losses at all.

The top three causes of a disruption in 2016 were unplanned IT outages (60%), loss of talent of skills (45%), and cyber-attack or data breach (39%). The top six consequences of a supply chain disruption were loss of productivity (68%), increased cost of working (53%), reputation damage (38%), customer complaints (40%), impaired service outcome (40%), and loss of revenue (37%). So, while there will always be an operational cost to prevent disruptions, in most cases those measures are significantly more cost-effective than allowing a disruption to take place.

Key Factors in a Resilient Supply Chain

  1. Top Management Must Be Committed: As with most undertakings in any organization, leadership starts at the top. When a “champion” is identified at this level, the rest of the organization is more likely to adopt a resiliency mindset.
  2. Business Continuity Arrangements Must Be Made: Supply chain disruptions can strike at any moment for any number of reasons. When a disruption threatens business continuity, a contingency plan must take effect. This may require multiple suppliers coordinating with counterparts to build a resiliency plan.
  3. Keep Supply Chain Visibility a Top Priority: Organizations must be aware of the entire network and identify weak links. Otherwise, a disruption can have a much wider impact as downstream partners react with less lead time.
  4. Partner with an Supply Chain Risk Management Expert: Services like Avetta provide supplier risk profiles, expertise across a number of industries, visibility into contractor capabilities, and much more. Organizations can leverage a centralized, hosted service that offers a repeatable, objective, and consistent service.

Organizations that make supply chain resiliency a goal will also achieve supply chain sustainability as a natural outcome. When companies minimize supply chain disruptions, they also mitigate damage to the environment and harm to people. And those are responsibilities everyone shares.

How is your organization handling it?

We're taking steps internally to ensure we can support you during this crisis by:

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Maintain a current Business Continuity Plan

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Promote a safe, clean and sanitized work environment

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Enable employees to work remotely

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Institute Office Distancing policies

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No visitors to the office

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Encourage employees to self-educate using online resources (WHO)

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Restrict travel—all non-essential travel is forbidden

To learn more, we encourage you to visit our COVID-19 Resource Library.

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