Gartner: 6 strategies to improve supply chain resilience!

Release time:

Jun 24,2022

Gartner: 6 strategies to improve supply chain resilience!

Brexit, the U. S.-China trade war, widespread national geopolitical trends, and the recent neo-crowning epidemic have changed the priorities of many supply chain leaders.They now need to trade-off between cost and operational efficiency to improve supply chain resilience.


According to a recent Gartner survey,Only 21% of respondents currently have a highly resilient supply chain network, which means they have a high degree of visibility and agility in rapidly shifting sourcing, manufacturing and distribution activities.The survey suggests that building resilience will be a priority for many businesses after emerging from the current epidemic.It is estimated that within two to three years, more than half of the enterprises will have a highly resilient supply chain.

"The expense of retaining multiple points of supply must be seen more as an operating cost than as an inefficiency"


"Most supply chain leaders have recognized the need to improve resilience in the current environment," said Gerant John, vice president of Gartner analysts.However, measures such as alternative factories, dual sourcing and larger safety stocks run counter to the lean supply chain philosophy that has prevailed in recent decades."


Rebalancing efficiency and resilience will not be easy. In general, increased toughness results in additional costs. But the cost of doing nothing can be even greater. Supply chain leaders can adopt the following six strategies to build a more resilient supply chain network.


Strategy 1

Establish inventory and capacity buffers


Whether it is partial idleness of production facilities or excessive safety stocks, these different forms of buffer are the most direct way to improve resilience. The challenge of this strategy is that it is costly to build up buffer capacity,Supply chain leaders may struggle to justify it to management.


Leading companies can respond to surging new product launches or expansion into new growth areas through buffering capacity. Businesses can also create buffers for surging demand by strategically leveraging outsourced manufacturers.


Strategy 2

Manufacturing network diversification


In response to the US-China trade war, many companies have begun to seek to diversify their sourcing and production bases. For some companies, this means turning to new suppliers outside China or requiring existing partners to supply from other parts of Asia or other countries such as Mexico.


John pointed out, "In the past few years, the disruption to the operation of the supply chain has intensified.This means that the expense of maintaining multiple supply points must be seen more as an operating cost than as an inefficiency."


Strategy 3: Multiple sourcing


In 2011, major natural disasters in Japan and Thailand disrupted supply chains around the world, exposing companies' reliance on a single source. In the automotive industry, nearly completed cars cannot be shipped to customers because they lack some usually cheap parts.Multiple sourcing is clearly one way to mitigate this risk.


In order to achieve multi-sourcing, supply chain leaders must have a detailed understanding of their supplier network and be able to classify suppliers not only according to expenditure, but also according to their impact on revenue when interference events occur. Diversified sourcing can be achieved by awarding business to other suppliers or partnering with an existing single or unique supplier that can produce in multiple locations.



Strategy 4: Nearshore Outsourcing


In addition to multiple sourcing, some companies want to reduce geographic dependence and shorten the finished product cycle in global supply chain networks. Local or local supply chains may be more costly because they add more players and complexity to the ecosystem,But at the same time, it makes inventory easier to control and the location of products closer to the final consumer.



Strategy 5

Consistency of platform, product or factory


The more regionalized the supply chain network, the more consistent the factory technology must be for products to move seamlessly through the network. In the automotive industry, the same car platform used by a variety of different models is a good example of this consistency.


Standardized components for multiple products, especially those that are invisible or unimportant to the customer, are another form of consistency.On the one hand, this simplifies the procurement strategy, on the other hand, it also creates the opportunity to place a large number of parts in multiple suppliers, thereby improving resilience.



Strategy 6: Ecosystem Partnerships


The new crown outbreak demonstrates the need for a diversified sourcing strategy. At the same time, cooperation with strategic suppliers of raw materials and external service partners is also essential to better prepare for the future and build resilience. For businesses that cannot support multiple locations on their own,Strong cooperation with outsourcing manufacturers and global third-party logistics is essential to diversify production and sales to different countries.


Gartner survey data shows that about half of the companies surveyed are using external manufacturers or are exploring better support for mobile products,About half of the respondents are hiring logistics partners for this purpose.