Establishing Diversification and Resiliency within the Supply Chain - Total Supply Chain Summit | Forum Events Ltd
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  • Establishing Diversification and Resiliency within the Supply Chain

    By Mark Morley, Director, Strategic Product Marketing, OpenText

    The global pandemic has been wreaking havoc across global business operations, with production stoppages, staff shortages, major event cancelations and concerns about supply chain stability increasing. Approximately, 94% of Fortune 1000 companies are experiencing supply chain disruptions.

    A recent report by Deloitte described this as a “black swan” event, whereby its impact on companies will force them to completely restructure their supply chains and embrace new technologies, such as cloud-based solutions to improve business operations. Companies that do not take tangible steps to restructure their business operations to create a more resilient business will ultimately lag behind competitors and risk failure.

    To overcome these pressures, the supply chain must not only be resilient, but also become increasingly diverse. Companies need to evaluate their overall sourcing strategy while diversifying sources.

    Adapting in the face of supply chain uncertainty 

    As the pandemic grabbed a stronger hold on global economies, especially the global healthcare sector, many organisations were asked to answer government requests to help produce medical equipment, gowns, masks and hand sanitizer. Many automotive manufacturers, including GM, Ford, Jaguar Land Rover and even the Formula One race teams in Europe, reconfigured parts of their production operations to manufacture critical medical equipment. Distilleries across the UK switched production to make alcohol-based hand sanitizer to slow the rate of coronavirus transmission. More than 20 companies – including Ford, Rolls-Royce, McLaren and Siemens UK – formed the Ventilator Challenge UK Consortium, designed to help offset the shortage of medical equipment. 

    Diversification of Supply Chains 

    According to a recent survey by PwC, a growing number of CFOs expect to change the breadth of their supply chains as a result of the COVID-19 pandemic with many focusing on diversification. Over the past two decades, the concept of supply diversification has focused on continually driving down costs. Many companies are now learning the hard way that relying on a single supplier is at best risky and at worst catastrophic. Establishing supply chain diversification requires organisations to adopt more robust digital tools and make a fundamental change in their approach to business practices. 

    One of the first initial steps organisations can take to mitigate future risk, is to reduce how much of their supply portfolio originates from a single supplier and eliminate their dependence on single regions or countries. What businesses can do instead is incorporate a combination of multiple trusted near-shore and offshore suppliers dispersed globally which can be easily switched out should a specific region become disrupted. 

    Given today’s global levels of disruption, organisations should not only infuse diversification within their sources, but also incorporate four elements within their supply chains models. 


    Adopting technology which enables supply chain flexibility and agility allows for vital channels of information to remain open and accessible anywhere. In today’s market, cloud-based technology deployments that facilitate the effective integration, management and secure exchange of data across people, systems and things is essential, providing businesses an opportunity to be more cost-efficient and manage risk without sacrificing competitive advantage, customer satisfaction or product innovation. 


    Another important aspect of business continuity for supply chains is maintaining collaborative connections and alliances with external partners. Deploying a cloud-based platform allows trading partners to easily access, share and collaborate on the use of information. Organisations can work with their supplier partners to actively monitor and supervise the execution of dual sourcing strategies. It also means they can use the centralised management of all trading partner contact information to quickly establish the post-disruption condition of a supply chain – providing a significant competitive advantage while also leading to more accurate risk assessment and prevention steps for future disruption.

    Operational transparency

    Suppliers seeking to adapt their operations and continuously provide products and services to their customers should shift towards technologies that provide transparency, giving them a better opportunity to improve decision-making processes. Suppliers can integrate secure, expanded visibility into their multi-enterprise operations using integrated third-party data sources. This allows suppliers to self-monitor the functionality of critical components that could be impacted by unforeseen supply chain and operational disruptions.

    Incorporating the information advantage 

    By capturing and analysing an entire data set, a supplier can derive insights which improve operations, drive innovation, and open up more new business opportunities, producing a competitive information advantage. Stronger information management layered with analytics and machine learning technology can provide the insights required to remain on top of potential issues and maintain workflows – both vital for the viability of operational excellence within the larger supply chain ecosystem.

    The future of the global supply chain network  

    The pandemic has revealed many gaps in the global supply chain model. Many businesses are already having to rethink entire manufacturing and distribution models. Despite the fact that COVID-19 dislocated many areas of the global supply chain, it also presented an opportunity to drive real change in the supply chain ecosystem. It is critical now more than ever for organisations to not only respond with agility in the short-term, but also improve supply chain resilience for the long-term. A cloud based integration environment provides the digital foundation required for all employees to have secure access to essential business information and systems, collaborate effectively with dispersed internal and external stakeholders, synthesise data into timely insights and maintain supply chain visibility. Companies that capitalise on this moment and take the appropriate steps to incorporate cloud-based architectures will be able to respond quickly to changes and remain competitive within their industries. 


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