5 ways to strengthen your supply chains
The pandemic oﬀers valuable lessons that can help you compete in the months and years ahead
4 minutes read
- Lessons from the pandemic can help companies transform how they view and build supply chains
- Diversifying suppliers and ﬁnding local rather than global partners may strengthen supply chains
- Strategic investments in new technologies could help protect supply chains from future disruptions
The coronavirus revealed stark vulnerabilities in the supply chains that move products from the raw material stage, through production, and to a customer’s door. As key segments of this system faltered, businesses responded in real time, ﬁnding new ways to source materials and keep their products moving. The lessons learned from this experience can help companies transform how they view and build supply chains, says Matthew Elliott, Business Banking Midwest Region Executive for Bank of America.
A lot of people have gained a deeper understanding of how connected they are to other businesses, and the importance of planning, resilience and due diligence
In preparing for the new economy ahead, “small and midsize businesses have the ability to be more agile than larger companies,” says Anna Nagurney, John F. Smith Memorial Professor of Operations Management at the University of Massachusetts Amherst. Recent conversations with these two experts revealed ﬁve ways to make your supply chains stronger than ever.
1. Reskill your workers
Business success almost always comes down to people, and in the scramble to keep supply chains moving during the pandemic, companies have often had to ask workers to ﬁll unfamiliar roles or take over for colleagues unable to work. Now, “reskilling” employees to master new, often broader responsibilities in a revamped supply chain can help companies prepare for unexpected demands, Nagurney says. “We’re really seeing the importance of teamwork and collaboration,” she adds. Encouraging workers to be familiar with their colleagues’ roles will make it easier for them to ﬁll in for each other when needed. Make sure you also provide tools and training for employees to perform tasks both in person and remotely.
2. Diversify your suppliers
The pandemic has taught hard lessons about the dangers of depending on too few suppliers. “If you have only one supply source for your major product line, that's a risk you need to pay attention to and manage,” Elliott says. Moving forward, even if a current supplier is meeting your needs, steering some business to alternative suppliers can help you build redundancies into your system and prepare for future disruptions.
3. Think local
Trade disputes, tariﬀs and geopolitical tensions have pushed companies of all sizes to consider shifting global supply chains closer to home, and the coronavirus is only hastening that trend. While situations and needs will vary from business to business, shorter, more localized supply chains could oﬀer long-term advantages, Nagurney says. “It’s easier to ensure higher quality of products and greater transparency, and if something goes wrong, you can readjust more quickly.” As a small or midsize business, you may also ﬁnd opportunities to join the supply chains of major U.S. companies as they “reshore” more of their operations.
4. Consider strategic upgrades
While the pandemic has pushed many companies to reduce their costs, it’s also important to minimize risks and improve reliability. Strategic investments in new technologies could help protect your supply chains from future disruptions. Advanced tracking soﬅware, for example, can help you monitor your products through the supply chain and identify and correct weak points, Nagurney says. As this technology improves and becomes more accessible, more small and midsize businesses could also invest in robotics that move goods around warehouse ﬂoors or load vehicles, and in drones that make deliveries.
5. Plan, review and monitor
Breakdowns at crucial points in their supply chains have made it diﬃcult or impossible for many businesses to get products to market. Now, strategic planning can help you anticipate needs across your supply chain. Continually review your supply chain at each crucial juncture, Elliott suggests. “Consider developing a scorecard that monitors the ﬁnancial health of your suppliers and customers,” he says. Then you can keep tabs not just on your own reliability and eﬃciency, but also that of your essential partners.
As you review your supply chains and consider necessary adjustments for a post-coronavirus world, he adds, speak with your banking partner about ways to maintain security and facilitate cash ﬂow throughout your supply chain.
- Logistics & supply chain
- Business innovation
- Process management
Matthew Elliott, Business Banking Midwest Region Executive for Bank of America
Anna Nagurney, John F. Smith Memorial Professor of Operations Management at the University of Massachusetts Amherst