Global supply chain is a remarkably complex arrangement that begins with procurement of raw materials and processing. It involves suppliers sitting in different continents and manufacturers who use different components to roll out the final product. Then there are consumers in different markets. It means that all the units in the value chain are balanced on thin ice and are fraught with vulnerabilities. Any shock in any part of the world can have a ripple effect that can disturb the equilibrium in global supply chain. As the years of pandemic have shown, ability of manufacturers to get supply from the suppliers sitting in different countries around the world was severely compromised. The end consumer who was sitting at the other end of the value chain was bereft of products whether life-saving medicines or oxygen cylinders or general use items.
Resilience in supply chain has emerged as a key metric for the companies that can play a strategic role in propelling companies’ success. By embracing sustainable practices and cultivating resilience, companies can pave the way for profitable business as well as adopt measures that neutralise shocks in supply chain from having any ripple effect.
The Hidden Risks
Interconnectedness and interdependence in global supply chain is difficult to understand. Modern products often need sophisticated materials that require specialised technological skills to make. It is very difficult for a single manufacturer to possess the capabilities necessary to produce everything by itself. For example, automakers are not equipped to create the growing electronic components like touchscreen displays and navigation systems or the countless microprocessors that control the engine, steering, power windows and lighting. So, they have to source. Secondly, manufacturers source from suppliers who are specialists of particular products. This gives manufacturers the liberty to customise and incorporate latest technology. However, dependence on a single supplier can leave them vulnerable. If that supplier produces the item in only one plant or in one country, the disruption risks are even higher.
Reckoning the disruptions
We live in a multipolar economic system, so there are differences in economic systems competing with each other. Then the phenomena of global warming that is reflected in rising temperature around the globe creating more frequent and severe events, like typhoons, cyclones, heat waves and flooding. The pandemic that hit humanity had exposed the vulnerabilities in global supply chain that is designed for cost and efficiency, but without really a thought to what could go wrong along the way.
Identifying vulnerabilities
Understanding where the risks lie entails going far beyond the first and second tiers of the supply chain. It will require a lot of digging and mapping of the full supply chain including distribution facilities and transportation hubs. This could be time-consuming and would require a lot of patience but can be expensive too. But a surprise disruption that brings business to a halt can be much more costly than identifying vulnerabilities.
Diversify supply base
Dependence from a risky source can be reduced by adding more resources in locations that are not known to be vulnerable to the same risks. This can also help diversify the production processes, help source locally and integrate nearby geographies in business processes in mutually beneficial relationships. Secondly, production of major products should be also undertaken in geographies they are consumed.
Localised stockholding
Ripple effects of any disruption shouldn’t pervade the entire supply chain, and this is why there should be every effort to not only decentralise production but also decentralised warehousing. Having supplies closure and taking less time to get to your end-consumer markets is important and localised storekeeping helps achieve that. Strategy should be to identify the stock in the interim at different levels of supply chain to feed the arising demand based on trend analysis.
Process innovations and data analytics
A resilient supply chain would require a decentralised model wherein there will be a host of concentric supply chain models cross-feeding yet are autonomous. Availability of products at shorter notice would demand leveraging the immense capabilities that cloud-based solutions will offer and this will go a long way in making the edifice of logistics and distribution leaner, resilient and responsive. This will pull in local resources for optimum benefits to the surroundings and people and this would be clearly more sustainable. Thus, the urge to optimise, rationalise and automate would be properly channelled.
Managing Director
Safexpress Pvt Ltd
Driving Sustainable success and bringing resilience
As one of India’s largest logistics and distribution companies, Safexpress is uniquely placed with its well-entrenched logistics and distribution network built on the principle of end-to-end logistics connecting manufacturers with suppliers and consumers. While manufacturers source their supplies from suppliers using extensive network of our first mile offices, finished products are brought to consumers through our distribution network that delivers in all 31239 pin codes.
Decentralised distribution
Safexpress operation is built on hub-and-spoke model of connectivity and distribution. This model can effectively help in local warehousing and short and long haul distribution. This ensures not only speed and safety to the cargo but also helps that shocks are contained in the area of occurrence without allowing it to spread in entire supply chain.
Infrastructure and network
With more than 19.5 million sq. feet of warehousing space, 99 transshipment hubs and 79 logistics parks, more than 800 delivery gateways serving each of 31239 pin codes and more than 10,000 fully-containerised vehicles operating more than 2450 routes, Safexpress has required capability to serve the emerging supply chain needs with its resilience.
