In this article, we explain why it pays to think about Supply Chain Resilience in two directions: reactive and proactive. We also walk through three starting points for a supply-chain analysis that help you make your supply chains more secure and uncover untapped potential in your business.
From traffic on the highway to staff shortages caused by a global pandemic: supply chains are more prone to disruption than we'd like. Since smooth, interlocking processes are especially critical in online retail, more and more business owners are placing high value on the resilience of their logistics structures — known as Supply Chain Resilience.
In this article, you'll read why it's worth thinking about Supply Chain Resilience in two directions: reactive and proactive. We'll also walk you through three starting points for a supply-chain analysis that help you make your supply chains more secure while uncovering untapped potential in your business.
Supply Chain Resilience is a term mainly used in risk management. It refers to a supply chain's ability to withstand disruptions to operations. In German, it's often translated as "Belastbarkeit der Lieferkette" — but compared to the English term, that says less about what the concept actually entails.
More broadly, resilience refers to a system's ability to handle stressful situations without sustaining lasting damage. Applied to supply chain management, it means a supply chain doesn't collapse as a result of disruptions. The reason isn't that it can simply absorb a lot — it's that the supply chain adapts to its environment and can even come out of difficult situations stronger.
Resilience can be thought of in two directions: reactive, to solve current problems — and proactive, to be prepared for future disruptions. In supply chain management, that means a combination of troubleshooting and strategic planning.
Imagine, for example, that an online retailer realizes mid-Black Friday sale that there aren't enough shipping boxes in stock. But because every online store has a high demand for shipping materials right now, restocking also takes longer than usual. The supply chain is disrupted in two places at once: order processing stalls and the delivery of the necessary shipping materials takes too long.
Reactive resilience in the supply chain means reacting quickly in moments like these and first solving the current problem: we need more boxes so we can ship the sale orders quickly. Instead of waiting for delivery times at our usual supplier to normalize, we order from another source.
Beyond that, we also use the experience to tackle Supply Chain Resilience proactively at the problem points we've now identified. By outsourcing order processing to a professional fulfillment partner, we make sure that during the next big sale, our processes scale flexibly with the order volume.
Small disruptions in the supply chain are annoying, but mostly not a big deal. To make the parts of a supply chain prone to incidents more resilient, most companies plan small buffers over time.
If a delivery arrives a day or two later because it got stuck in traffic or customs took a bit longer, that doesn't throw much off. Since you know the average storage duration of your products anyway, you've ordered far enough ahead to simply ship the rest of the old batch until the next delivery arrives.
It gets harder when problems show up at points within the supply chain where everything used to run smoothly. Those are the disruptions that catch a business off guard — simply because there's no Plan B at hand.
Building a secure supply chain management solution therefore usually starts with a thorough risk assessment, where every step of the supply chain is critically questioned: do we really need this? And what happens if something goes wrong here?
A crisis-proof supply chain doesn't require you to spot every potential risk before it turns into a real problem: even the best planning can't prevent something from going wrong sooner or later.
In practice, Supply Chain Resilience thrives on the interplay between proactive and reactive elements. If you prepare well, you can react more calmly when things happen — and if you feed your experience back into supply chain management, you contribute to the constant evolution of your supply chain.
Here are three questions that help you uncover weak spots along your supply chain and turn your E-Commerce experience into effective logistics strategies.
To prevent a single disruption from derailing your entire supply chain, it pays to build redundant structures. That doesn't necessarily mean using two parallel suppliers for every step in the supply chain — the more partner companies are involved, the more expensive and complicated the overall picture becomes. To improve Supply Chain Resilience, though, it's a good idea to have a Plan B ready for every step in the chain. That way, when needed, you can adjust your operations to the situation without having to spend time researching and comparing prices.
If you always restock "just in time," you risk having even small disruptions — like traffic or longer customs processing before holidays — result in an empty warehouse. To prevent that, a secure supply chain has to balance lean management with an emergency buffer: the goal is to put exactly the quantities into your warehouse that give you enough time to switch to Plan B and source from elsewhere when push comes to shove.
Your new product turned out to be a bestseller, but right now a freighter is stuck in the English Channel and nobody knows when the next delivery will arrive? Or has a supplier dropped out at short notice and production threatens to stall?
When it comes to Supply Chain Resilience, you also benefit when your online store and warehouse are connected through digital interfaces. That way, you find out with one click what you have in stock — and can activate your Plan B for restocking that much faster if inventory isn't enough.
A holistic strategy for more Supply Chain Resilience offers two big advantages. By looking at the supply chain as a whole, you not only ensure you're protected against disruptions: through the regular review of individual steps, you also get to know your own operations better. And that often opens up unexpected potential.
You can use the ongoing review of Supply Chain Resilience as an opportunity to also regularly check the cost-effectiveness and sustainability of your supply chain. When you collect quotes from suppliers and service providers for your Plan B, you can also use the chance for a price comparison.
And if you're already comparing shipping conditions, you can also make emissions on the various shipping routes a factor in your routine analysis — combining effective risk management with building a sustainable supply chain.
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