Supply Chain Expert Warns Against Single Backup Plan

Supply chain volatility is becoming a permanent fixture in the business landscape, according to Lisa Anderson, a supply chain expert. Companies must move beyond relying on a single backup plan to navigate the unpredictable waters of global commerce.

Anderson, a recognized authority on supply chain strategy and ERP systems, argues that a single backup plan is insufficient.

Recent challenges in major waterways have highlighted the need for robust supply chain strategies. Low water levels have reduced capacity through the Panama Canal, and similar issues have affected the Mississippi and Rhine Rivers. Companies might respond by shifting products to alternative routes, ports, or modes of transportation. However, these alternate routes can face their own disruptions, from port congestion and bridge closures to labor issues, weather events, or transportation bottlenecks.

Anderson emphasizes that identifying an alternate route, supplier, or production location does not solve the problem.

To build resilient supply chains, manufacturers must develop multiple executable alternatives. This involves evaluating end-to-end supply chain networks to identify critical dependencies and determining viable alternatives across suppliers, production facilities, transportation modes, routes, and logistics partners. Anderson stresses that these alternatives must be viable, meaning they must have the capacity, capabilities, and resources to support additional volume when needed.

Qualifying additional suppliers, reserving capacity, cross-training employees, developing strategic partnerships, identifying alternate transportation modes and routes, and determining where production can be shifted or expanded are all crucial steps.

Greater supply chain visibility can also provide companies with valuable time to respond to disruptions. ERP systems, advanced planning technologies, artificial intelligence, and supply chain visibility tools can help manufacturers identify changing conditions and potential constraints earlier. Sales, Inventory & Operations Planning (SIOP) provides the framework to connect this information with customer demand, capacity, inventory, suppliers, production, and financial priorities.

Scenario planning can help companies determine in advance how different disruptions could affect customers, production, inventory, and profitability. Leadership teams can evaluate alternatives and establish priorities before a crisis strikes, rather than developing a response in the middle of a crisis.

Anderson believes that the objective is not to predict every disruption, which is impossible.

Supply chain volatility isn't going away, Anderson concluded.

Companies are advised to move beyond reactive problem-solving and incorporate resilience into supply chain strategy, planning, and investment decisions. By doing so, they can better navigate the challenges and uncertainties of the global marketplace.