Geopolitical tensions, natural disasters, trade disruptions.
These are not uncommon challenges in the supply chain world. As we’ve seen in recent years—with missile attacks and trade tensions to floods in Europe—global supply chains are facing unprecedented challenges.
To thrive in the face of these ongoing disruptions requires businesses to adopt strategies that not only address immediate risks but also build long-term resilience.
1. Invest in Resilience and Risk Management
A key takeaway from recent research is that companies are making significant progress on supply chain resilience. 73% of businesses are now pursuing dual-sourcing strategies, reducing dependency on a single supplier or region, while 60% are regionalizing their supply chains to mitigate risks tied to global uncertainties.
Yet, challenges persist. Many companies still lack comprehensive risk management processes, especially at the board level. While 75% of companies believe they have the internal capabilities to manage supply chain risks, only a small percentage (25%) have formal processes to discuss these risks at the highest levels of management.
To survive future supply chain hurdles, organizations need to take a proactive approach to identifying and mitigating potential disruptions. This includes enhancing supply chain intelligence, improving visibility into tier-one suppliers, and integrating risk management frameworks into strategic decision-making at all levels.
2. Leverage Advanced Technology and Digital Tools
Technology is a game-changer in building resilience and overcoming supply chain disruptions. Advanced Planning and Scheduling (APS) systems, which are crucial to modern supply chain digitization, allow businesses to respond more rapidly to disruptions by evaluating multiple scenarios and optimizing operations.
However, many organizations still struggle with imperfect data. While data quality remains a bottleneck for many companies, it’s important not to let this prevent progress. The 80/20 rule—focusing on getting most of the data right and then refining it over time—can help accelerate digital transformation efforts without getting bogged down by minor data issues.
AI and machine learning are increasingly becoming integral to supply chain management. AI tools can process data from multiple sources—supplier information, weather forecasts, social media trends, and more—to predict and manage disruptions in real time. By automating routine analysis and decision-making, AI can free up valuable time for supply chain managers to focus on strategic actions.
3. Address Talent Gaps with Training and Development
Supply chain digitization is not just about tools; it’s also about having the right talent. The demand for digital skills has skyrocketed, yet there’s a shortage of skilled professionals. While many companies have relied on external talent, the best approach in the long run is to invest in internal training programs. By fostering a culture of continuous learning, companies can better equip their teams to navigate complex supply chain challenges.
4. Strengthen the Boardroom Connection
A critical gap identified in the survey is the disconnect between supply chain executives and their boards. Despite its growing importance, only a quarter of boards actively engage in supply chain discussions. It’s essential for supply chain leaders to bridge this gap by providing regular updates on risks and incorporating risk analysis into broader business strategies.
5. Rethink Inventory Strategies
The pandemic taught businesses the importance of safety stocks, but many are now reevaluating their inventory strategies.
Businesses using larger inventory buffers to mitigate disruptions have dropped dramatically from 59% to 34%. Looking ahead, 47% plan to maintain current inventory levels, while 46% aim to scale back or remove risk buffers, returning inventories to or below pre-pandemic levels. Just 7% plan to increase inventory across their networks.
Striking the right balance between inventory management and risk mitigation will be crucial for navigating future supply chain disruptions.
