The global pandemic, recent wars and climate stressors have forced supply chain managers to get creative. With many products and materials becoming less accessible, and prices becoming more volatile, organizations realized how important supply chain resilience is and how geopolitical uncertainty impacts strategy. Companies are looking toward data and forecasting to try and get a handle on uncertainty.

The Importance of a Supply Chain Resilience Strategy

After years of bottlenecks and revenue losses, agencies are finally recognizing the importance of supply chain resilience as an intentional goal. Companies like Synovus have made immense efforts to uncover how to navigate the future despite the chaos, offering businesses information and access to liquidity to assist with supply chain and costs through strategic advice and funding. During a recent report, Techniques for Increasing Supply Chain Resilience, Synovus uncovered that continued disruptions could lead to 30%-50% earnings losses before depreciation, taxes and interest. Stakeholders must secure assets and create agile structures to mitigate these impacts if external factors threaten stability.

The Elements of a Quality Supply Chain Resilience Initiative

In their findings, Synovus discovered six consistent elements of a smart supply chain resilience strategy to help organizations deal with uncertainty.

Supplier Diversification

Many companies invest in a handful of partners for their most notable essentials. While this streamlines communications and procurement, any trade control upsets could prove fatal to clients. Tim Dewald — the supply chain director at Hercules Inc. — described how expanding international partnerships made the company more competitive.

He said, “We are ahead of the curve in near-shore sourcing. In one U.S. facility, a product was 95% sourced from China and five percent from Mexico in 2018. Today, the numbers are reversed — 95% Mexico, five percent China,” says Dewald. The relationship also helped Hercules Inc. avoid 301 tariffs, reduce ocean freight and cut transit times from weeks to days.”

Design a Multipronged Approach

Contingency plan documents should consider every possible scenario that could influence the entity and transportation to clients. For example, while natural disasters may not be common in an area, a thoughtful supply chain would know how to source products if it impacts a relevant port or shipping location.

Additionally, stakeholders must consider future products, lead times, and demand shifts while protecting existing stock and business relationships. This ensures corporate goals remain focused on the most lucrative objectives and customer satisfaction remains high.

See More With Digital Transformation

Technological advancements are the key to increased visibility. Many smart devices and sensors give supply chains a better on inventory statuses, transportation delays and contract updates. Having access to a constant stream of up-to-date data makes every worker more informed about the supply chain, which makes it easier for staff to spot inefficiencies and even fraud because anomalies are more straightforward to identify.

Manage Cash Flow

Payments are inconsistent in the supply chain business, requiring budgeting teams to manage liquidity and risk closely. Future uncertainty may warrant larger safety nets to cushion businesses as trade dynamics continue to be chaotic and working capital is minimal for buyers.

Be More Collaborative

Like many industrial sectors, supply chains are enduring labor shortages. To mend gaps, they are diverting to cobots and contactors, but vacancies persist. Making connections across nations is more important than ever for establishing stability.

Managing director of Synovus Capital Markets Tim Loffredio commented on how contracts between the U.S. Maritime Alliance and the International Longshoremen’s Association are jeopardizing importer relations, saying, “This strike could affect ports from Maine all the way to Texas. So, it’s not only important to have contingency plans, but also to work across the entire business to connect appropriate people, resources and tools.”

Consider Currency

Corporations dealing with several currencies are undertaking an implied risk. Products are subject to price increases outside of the supply chain’s control. Many resilience initiatives enforce a consistent currency rule so payments are less subject to variability.

David Grimaldi — the Synovus Treasury Management foreign exchange sales consultant — suggested, “Dual currency billing, forward contracts and multicurrency accounts are good ways to manage foreign currency exposure risks and reduce the uncertainty of dealing with foreign exchange in the supply chain.”

Supply Chain Resilience and Risk Management

The future could be more unpredictable than the last decade. It is impossible to predict how geopolitical tensions will unfold or when economic instability will plague a region. Supply chains are one of the few industries with persistent intentional influence, so designing plans to adapt to every possible change requires dedication and patience.