The supply chain is simply a system of organizations and activities that produce and move a product until it reaches the consumer. The chain includes suppliers who provide product parts and raw materials and distributors who market and deliver the products.
A sudden change in any of these processes can disrupt the supply chain, effectively slowing down the delivery rate of products to users. The global economy is strongly interconnected, generating enormous benefits for companies operating around the world. However, even large entities are not exempt from disasters. The constant changes in today’s market bring new challenges for supply chains, and process interruptions and failures remain a significant concern. The most critical blind spot for most companies is supply chain visibility. Poor visibility on what’s happening at their supplier’s supplier (or even knowing the identity, location, or other information about their supplier’s supplier) can lead to disastrous consequences.
Coke is an example of an international brand blindsided by a supply chain problem. In 1999 about thirty Belgian children became sick after drinking Coke products. Belgium eventually ordered the recall of all Coca-Cola products, followed by Luxembourg and the Netherlands. Coca-Cola finally determined that the illnesses were the result of an improperly processed batch of carbon dioxide. However, its reputational damage lingered for years.
Supply chain disruptions such as world events and natural disasters usually happen unexpectedly. During the last eighteen months, the coronavirus pandemic caused many manufacturers and companies to pause or slow production. Disruptions to supply chains typically provide an actual test of the flexibility of a company’s operations. Supply chains disruptions are inevitable, but through careful assessment of potential supply chain risks and diversification of your suppliers, you can prepare for even the most unpredictable events.
Supply chain transparency is always important, but even more so during a crisis. Transparency is one of the top challenges of modern supply chains as it is associated with ethical, commercial, and sustainability issues. Transparency directly impacts consumers’ trust with organizations as it proactively assures consumers that the organization will achieve high levels of sustainable performance. Visibility has a direct impact on the quality and quantity of a company’s traceability and transparency. Mapping each member of the supply chain and their actions is key to achieving the clarity necessary to reduce blind spots.
Flexibility refers to the supply chain’s agility and rapid response capacity in the face of changes in the market rhythm. The causes of changes in the current market are globalization, the incorporation of new markets, and developments in the logistics sector that force companies to adapt to the constant evolution of their supply chain and take all their stakeholders into account. An inflexible supply chain is vulnerable to disruptions. Companies need to listen to end customers’ added value, adapt to market changes, and have a value chain that balances according to these changes.
3. Logistics Mapping
Organizations should gather information about their suppliers, their suppliers’ suppliers, and the people working within their supply chain to create a global survey of their logistics system. This data can be stored in a single platform for easy analysis. Mapping logistics chains helps identify and understand risks inherent in the supply chain and can help protect companies’ from operational and reputational damage. For example, some countries have higher rates of exploitative practices such as child labor, and therefore, companies are at higher risk when sourcing from these locations. Knowing the location of suppliers helps organizations understand the magnitude of these risks.
4. Build Relationships
Organizations need to build relationships, encourage open communication throughout their logistics chain, and motivate their suppliers to do the same. Today, most companies using just-in-time deliveries, so they must keep on top of production schedules and the movement of goods.
It is impossible to eliminate logistics blind spots. However, the more information an organization gathers about the suppliers and workers within their supply chain, the more they can understand the environmental and human rights impacts their decisions can have, thus reducing blind spots.