Collaboration Perhaps the most important element of your supply chain's ability to overcomeor even profit off ofunexpected changes and developments is the one that's most difficult to measure objectively: collaboration. How and Why to Measure Supply Chain Resilience. - Scope should cover all major components and subassemblies, measured in terms of days that it takes for the supply chain to return back to pre-disruption event quantities and quality of delivery. Some of the most important ones can be listed and described as follows: At a Glance, Flexible supply networks help companies minimize the risk of disruption in times of stress. Scholarly research in the last twenty years has defined some key constructs of supply chain resilience. Third, we can use resilience indexes to compare resilience of different companies. Effectively managing a supply chain in times of crisis requires preplanning, real-time information sources and the ability to make fast decisions based on that data. In order to establish what tools you need and how to use them, you'll need to know your goals. Presented at APICS, September 2016: How and Why to Measure Supply Chain Resilience - Quantifying resilience to improve decision-making. Three steps to optimal resilience Short-term solutions could work at a time when supply chains were more predictable than they are today. 3. Required fields are marked * Comment. As the world gets to grips with a world health and humanitarian emergency resulting . Resilience measures your company's ability to quickly recognize, react to and recover from a disruption to your supplier network. Time-to-survive refers to the amount of time it takes for your business to resume your supply chain operation after a disruption. Sustainability certifications are a proven way to improve supply chains' economic and environmental performance. To measure success, supply chain leaders should use a balanced set of indicators not only to track business outcomes, but also to identify existing vulnerabilities. While sustainability metrics will likely continue to vary widely between supply chains, the Covid-19 crisis also has a number of general implications for measurement in this area. How does resilience relate to risk management? First, the resilience metrics can be used to compare resilience of different alternative supply chain designs or the effectiveness of different recovery strategies. To compare various supply chains. Implementing such "risk-adjusted cost optimization" requires CFOs to collect end-to-end data, gathering it from internal and external silos, as well as partners along the supply chain. Five years later that share ranges between 75% and 90%. The quantification of resilience will help organizations assess the effectiveness of various risk mitigation strategies. As the humanitarian crisis unfolds, supply chain leaders need to ensure their supply chain strategies are socially responsible. typically it is a temporaryand very expensivemeasure. How can a company improve the resilience of its supply chain processes, so that it can recover rapidly from unexpected disruptions, assure business continuity and adapt effectively to changing external conditions? In some sense delivery performance is a subset of perfect order rate, which encompasses many measures. You can't avoid every disruption no matter how much you try. The exercise should cover all relevant people, processes and technology factors. Second, the metrics are of value when comparing resilience performance over several years. Preparing for long-term uncertainty and possible upheaval may encourage companies to build resilience into their supply chains. Dow defines resilience as "the capacity to survive, adapt and grow in the face of turbulent change." As led by supply-chain analyst Shannon Hemmelgarn and oxygenated solvents global supply-chain director Jennifer McIntyre, the initiative was broken into three components: assessment, resilience testing and implementation. That way, staff members know when they are expected to work on these backups and can plan their day-to-day around that time accordingly. There are three core metrics to evaluate supply chain resilience: time-to-survive, time-to-recover and time-to-thrive. Supply Chain Recovery Planning. Given its high degree of specificity, this battle drill approach significantly increases the confidence and speed required to inject resilience in one's supply chain, while yielding the necessary quantitative and qualitative detail for potential next steps should it yield a "go" decision to nearshore. NEW YORK; Oct. 26, 2020 - Accenture (NYSE: ACN) and the Massachusetts Institute of Technology (MIT) are co-developing a supply chain resilience stress test for assessing operational and financial risks created by major market disruptions, disasters or other catastrophic events. Target COO John Mulligan and CEO Brian Cornell have defended the company's gradual transition to store-based e-commerce fulfillment for at least five years. by. These should take place at regular intervals (e.g., quarterly). There's some evidence that companies with long-term, sustainability focused strategies are weathering the consequences of the disruptions better than those . 1. It is the only power factor that can help withstand, predict and overcome disruptions for an unbroken supply chain. Financial benchmarks. The quicker your supply chain can respond to disruption and recover, the more resilient it is. Resilience of the Supply Chain. Time-to-survive refers to the amount of time it takes for your business to resume your supply chain operation after a disruption. 2. To propose an index to quantify the supply chain resilience. Comments. How can #supplychain leaders build greater resilience into their networks? Strengths and Weaknesses, Supply chain agility represents the enterprise's readiness to meet changes in the face of increasing demand volatility. Critical infrastructure (CI) plays an essential role in reading, reacting and responding while dealing with natural disasters. To be successful in this scenario, supply chain of a firm should be resilient. You can evaluate them based on credit, data security, and their own resilience. The build-out of the 3Cs for the supply chain must be a . Invest in key supply chain capabilities, including visibility and monitoring, alternative business operating models, alternative supplier sourcing . In August, Mulligan called concerns that the . According to these authors, a more system approach must be taken into consideration on researches related to supply chains. Implement digital and automated manufacturing capabilities paired with strong manufacturing excellence This process could evolve in three stages: Firefighting By supply chain resilience we mean its preparedness for any kind of disruption. Measuring supply chain resilience using graph theory Going forward, companies should consider the following: Raise the prominence of supply chain resilience. Perfect order rate is one of the most common KPIs for assessing the overall supply chain performance. Reducing the dependency on off-shore manufacturers is a good way to improve resiliency. Advanced analytics can improve supply forecast accuracy by 20% to 60%. Supply Chain Resilience Guide i Strategic Overview Disasters disrupt preexisting networks of demand and supply. Regardless of the overall strategy for warehousing or inventory banking, companies will need to determine who in the supply chain is responsible for paying for additional warehousing or inventory carrying costs, how much inventory will be banked, the perishability of the goods stored, and how frequently they need to be replenished (e.g., by usin. To measure supply chain resilience, you need to first map the stages of a supply chain, end-to-end. As such, these industry professionals are . A truly resilient supply chain keeps operating when things go wrong even during events such as earthquakes, fires, and pandemics. Material and methods In this section, graph theory is explained, steps involved in developing supply chain resilience index are outlined and enablers of the index are proposed. Any safety measure you take will . As medical professionals work to mitigate the toll that the novel coronavirus has taken on human health around the world, businesses are beginning to wage their own fight in the growing economic crisis. The severe supply chain disruptions and their concurrent knock-on effects to organizations' balance sheets has resulted in Management taking a much greater interest in supply chain resilience, something which continuity, risk and resilience professionals have been wanting for many years. Most of the firms realize that with a specific end goal to develop a resilient supply chain, there is a need for assessment of performance . 0. adapted to assess the supply chain resilience. Then, run various disruptive events and assess their impact on the supply chain. Bring the supply closer. Unfortunately, shortages of life-saving and life-sustaining medications have severely affected many aspects of patient care for years, in large part because of the lack of resilience in drug supply chains. Summary. A resilient drug supply chain ensures that patients have safe and effective medications, in adequate quantities, when they're needed. The face of the world changed with the onset of the coronavirus pandemic; leading to a supply shock in China and the subsequent demand . Resilience metrics in supply chain models can be classified by, first, the mathematical approach to the metric and, second, by the performance measure utilized within the metric (see Francis, Bekera, 2014, Nan, Sansavini, 2017, Zobel, 2011 or Chowdhury & Quaddus (2017)).As Table 1 presents, we categorize first on the mathematical approach of the metric, i.e., is it based on recovery time (TTR . Supply chain managers should either switch to in-home production or contact on-shore suppliers. Presented at APICS, September 2016: How and Why to Measure Supply Chain Resilience - Quantifying resilience to improve decision-making. 2.1. Part of supply chain resiliency means planning for contingencies and always being able to set and manage expectations. For instance, Ford is creating a new on-shore manufacturing facility to get more control over its electric car battery supply. Researchers at MIT CTL conducted studies on how supply chains are impacted by disruptions such as terrorist attacks, natural disasters, and logistics failures. This fight is multipronged, with companies facing concerns about operational viability in addition to worker . Quickly reestablishing flows of water, food, pharmaceuticals, medical goods, fuel, and other crucial commodities is almost always in the immediate interest of survivors and longer-term recovery. The only realistic way to achieve that is to commit to sharing data with all tier 1 suppliers in your ecosystem, along with your logistics partners, and your customers. This activity gives you a more in-depth insight into what types of threats they may pose for your operations. 83% of professionals report that management commitment to . And in this edition of CFO Insights, we'll discuss the contributions finance can make to help create resilient supply chains, as well as to mitigate the . Lynch Named Resilient Supply Chain Thought Leader of the Year; Home Buy It The Book The Author Book News Contact Us. The recent Toyota brake pedal disaster is an example of a massive failure . Resilience is reaction, resistance and unwavering grit in the face of an unfathomable crisis. McKinsey senior partner Frank Snger sat down with Holbach to talk about how the organization responded to the challenges presented by the pandemic, how to build resilience into the supply chain in a . Now is the time for companies to improve long-term resilience. Supply chain partners are increasingly putting organisations at risk from their poor cyber security practices; a recent Harvard Business Review (HBR) report suggests that up to 60% of reported cyber-attacks were launched from the IT systems belonging to . Conventional risk management relies on risk identification and assessment to prevent disruptions. Market volatility; corruption; unfair trade practices; environmental issues; and a relentless stream of geopolitical, natural, and man-made events challenge today's supply chain management leaders constantly. A resilient supply chain must develop resilience capabilities to react to the negative consequences of unexpected events and to return quickly to its original state, the one before the risk occurrence, or to move to a new best state after being affected by the risk, and continue business operations as efficiently as possible. Capacity, capability and competency building are crucial to successfully emerging from each phase. But buyers must share the burdens involved in making this shift alongside the farmers themselves. How it works The supply chain resilience stress test maps a supply chain (using a digital twin) and runs disruption scenarios. There are three core metrics to evaluate supply chain resilience: time-to-survive, time-to-recover and time-to-thrive. This study address food supply chain resilience by proposing an FSC resilience model that explains the food product and transport flow via production, processing, distribution and retailing in circumstances of (CI) collapses post a natural disaster.,A combination of . . Supply chain resilience no longer implies merely the ability to manage risk. Bulk Orders TechTarget describes supply chain risk management (SCRM) as: 'The coordinated efforts of an organization to help identify, monitor, detect and mitigate threats to . That nimbleness in business - as in nature - is an important means of survival. These are basically core elements that determine the level of resilience within a network of suppliers. It's mainly useful for understanding your supply chain's ability to fulfill orders by the promised date. By taking a more strategic approach to managing supply chain risk, executives can leverage data analytics to make better use of information to stay in front of potential problems. Supply Chain risk management is fundamental to your organisation's cyber health. Reduce Supply Chain Vulnerabilities with Strategic Sourcing. "This comes . From pandemics to plant explosions, cyberthreats and scarce natural resources, the risks facing a supply base have never been so stark. 6 Strategies for a More Resilient Supply Chain In the wake of COVID-19 and other disruptions like Brexit and the U. S.-China trade war, supply chain leaders have to balance supply chain resilience and efficiency to secure their networks. Upside supply chain flexibility is one KPI that can provide some insight into the resilience of the supply chain. Companies should measure their exposure to disruption on an absolute basis and against their competitors. Most companies are investing in strategies designed to improve the resilience of their supply chains. The COVID-19 pandemic has shaken the world in profound and unexpected ways. Since the outbreak of COVID-19 at the start of 2020, organisations globally have faced unique supply chain challenges in its wake, overall 98 per cent of global supply chains surveyed by DHL Resilience360 (now Everstream Analytics) whether highly or somewhat affect believe that the pandemic has had an impact on their operations. Businesses Need Resilience In an age of global turbulence, resilience is a key competency for corporations. In logistics terms, a resilient supply chain is one that is able to effectively overcome the multiple disruptions in its path, ensuring that order preparation and delivery are carried out as per the agreed-upon conditions, despite any incidents that may arise. This will provide tools for managers to compare different supply chains. Market volatility; corruption; unfair trade practices; environmental issues; and a relentless stream of geopolitical, natural, and man-made events challenge today's supply chain management leaders constantly. This dissertation focuses on the area of supply chain disruption management and aims to make a contribution by studying how firms can manage supply chain disruptions by (i) becoming resilient and by (ii) reducing the risk of supply chain disruption arising out of innovation. Assessment and strategy. Assess the cyber resilience of your supply chain partners. The COVID-19 impact on supply chains means that business leaders must respond rapidly to improve supply chain resilience. Leave a Reply Cancel reply. Here are the 3 essential areas to focus on and some good examples of how to navigate each. Firm resilience is the ability of the firm to: be alert to supply . Most of the risks that could disrupt your operations fall into four broad categories: economic, environmental, political and ethical. The solution is to schedule attention units to work on supply chain resilience, Petrocelli said. The science behind data analytics helps . . Measuring food insecurity for example, drives accurate diagnosis as well as timely and appropriate response ( Barrett, 2010). Supply Chain Risks Continue Mounting. J. Paul Dittman, Reuben Slone, and John T. Mentzer. The formula for measuring on-time delivery (OTD) is: OTD = (On-time deliveries) / (Total deliveries) x 100, For example, let's say that out of 600 orders that were delivered, only 450 were delivered before the promised delivery date. For example, the "time-to-survive" for some factories in . By measuring a supply chain network's performance, organizations can quantify supply chain network resilience, identify potential points of failure, define mitigation strategies, and assess the related financial exposure. 1. In summary, building a resilient supply chain should focus on three phases: survive, recover, rebuild. Investments in supply chain resilience can deliver a 15% to 25% improvement in plant output and a 20% to 30% rise in customer satisfaction, Bain's experience shows. SC resiliency is added to the work process, as globalization and uncertainty are the new reality. This KPI directly measures a supply chain's ability to fulfill orders free of errors and incidents. The ability of a supply chain to respond to unexpected shocks . Some things to think about as you come up with this list are: Cost-effectiveness. How to Measure Supply Chain Resilience. In the current competitive and dynamic market, customer demands and interests are changing continuously, and hence, risk of disruption in the supply chain is also increasing. Examples of economic issues are a supplier going bankrupt, a recession or a work stoppage at a key manufacturing partner. Determining Your Goals. 8 Thus, resilience provides the ability for the supply chain . J ust like the impacts experienced during Covid-19, climate change physical risks can be highly local and create a disruption to supply chains. However, it is hampered by both To measure this, companies need to assess how long it would take their supply chain to achieve a sustainable production increase (like a 20% rise in demand) without it negatively impacting costs or service. Enterprises should map out supply chain networks from end consumers to tier-N suppliers. 2. The results can be compiled to deliver a quantifiable metric, which is known as a 'supply chain resilience index.'. Supply chain resilience is a company's ability to navigate unexpected supply chain disruptions with its existing capabilities. For example, the "time-to-survive" for some factories in China took about three weeks. Once you make a decision and communicate to customers, keep those lines of communication open. Conduct an end-to-end supply chain risk assessment to stress test the supply chain, identify critical risk scenarios and define potential responses. In other words, supply chain resilience is the ability to react to problems and recovering from them without significant impact to operations and customer timelines. What is Supply Chain Resilience? 6 Supply Chain Resilience 7 Supply Chain Resilience (SCR) during pre- Brexit and Covid-19 (continued) Assessment of SCR practices in Covid-19 and pre-Brexit Covid-19 As the pandemic hit the world unexpectedly at the beginning of 2020, firms had little time to prepare for the disruption, the proactive practices, like adaptability, supply In his two decades with Henkel, Holbach has helped to guide the business unit's supply-chain function through both expansion and disruption. credibly measure resilience, decision makers will not be able to make informed choices about which resilience interventions are most effective . February 05, 2010. Supply Chain Risk: It's Time to Measure It. More recently, this has expanded into supply chain risk management, supply chain security, and port resilience and security. collaboration and frequent communication between supply chain partners, including those considered at one time as a competitor : the supply chain has become increasingly collaborative, and supply chain entities are taking note of how collaboration between once-perceived enemies and competitors can actually help build trust with consumers, You can improve your supply chain's resilience by assessing supplier risk. A company must pay for the redundant stock, capacity . Supply chain resilience depends on visibility across the network, from end to end, and throughout at least two, preferably three, tiers of supply. (2011), resilience can be understood from three perspectives: readiness and preparedness, response and adaption and recovery or adjustment. In 2015, the company was shipping 20%-25% of e-commerce orders from Target stores. An effective Inventory Management Process, Production Scheduling Process, and Supplier Collaboration Process, as well as Lean Six Sigma projects and methods such as Total Productive Maintenance, 5S Visual Workplace Organization, and Mistake-Proofing, can help an organization improve material availability and as a result, improve inventory invest. 4.3 Business resilience Farris II says "supply chain management is being heralded as a value driver because it has such a wide-ranging effect on business success or failure.being the cash-to-cash metric a useful measure from both an accounting and the supply chain management perspective" [37]. The first step to improving resilience is to gain a clear view of supply chain risks at the company, business segment, or product level, depending on which level is like to be actionable for a given organization. Supply Chain Resilience and Climate Change. But unfamiliar risks may be hard to anticipate and still harder to . Create realistic response plans for the unexpected, Name * Email * . How it's measured For a business to complete a perfect order, it must meet the following requirements: The order left the warehouse on time Seven priorities are identified with a set of pragmatic actions for repurposing supply chains to . For each supply chain node/arc-like channel, warehouse, factory, supplier, or transportation mode, firms should establish a methodology to measure risk. Your email address will not be published. 9 Building resilience in a given chain, especially in critical and abnormal situations, can act as a bulwark against risks in the PSC. In particular, pulling data from internal sources, external bodies, and from social media to spot trends could be beneficial. Capability build-out. Supply chain risk management, by definition, is the process by which organizations take action to identify, assess and mitigate the risks they face within their entire supply chain. The Solution SCRAM is a facilitated process, supported by a computer . Manage expectations. According to Bhamra et al.
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