Breaking the Reactionary Cycle by Investing in Supply Chain Resilience
Supply chain professionals have always valued resilience. During the recent decades of relative stability, however, the business case for prioritizing resilience investments over cost reduction was unclear. As a result, companies have often responded to disruptions with short-term solutions such as building inventory. They seldom made long-term structural changes to their supply chains, such as nearshoring or building more capacity, at least partly because such moves often cannot address immediate disruptions and have an unclear return on investment (ROI).
Today, with the risk of a downturn looming, companies are under pressure to cut costs and improve working capital by reducing inventory; however, supply chain leaders should not abandon their efforts to promote resilience. Given the impacts of climate change and geopolitical instability, we believe that frequent and unpredictable supply chain disruptions are the ‘new normal’. The challenge now is to increase resilience while also delivering on cost, working capital and service-level commitments and targets.
This paper explores the capabilities required to absorb and recover from disruptions and discusses the status of implementation as revealed in a resilience capabilities benchmarking study conducted by Boston Consulting Group and APQC. It also offers guidance on how companies can develop a resilience strategy tailored to their risk profile.
This paper has been published by Henry Stewart Publications and they hold the copyright ownership.