Paul Power, Strategic Sourcing & Supply Chain Executive discusses how organisations can build resilience into their supply chain.
Most people reading this will be aware of the enormous challenges that 2020 brought in relation to supply chain logistics. Unfortunately, these challenges have continued to date into 2021. In particular, the recent six-day Suez Canal blockage highlighted how one vulnerable link in the supply chain can affect almost every stakeholder at each stage of the chain.
Supply chain resilience has become a priority and may set to become a key metric for business continuity and investor assurance. The British bank, HSBC, highlighted this late last year in their article; From reaction to action – Supply Chain Resilience and Agility in a COVID-19 World. This article stresses that businesses keen to de-risk should closely monitor their supply partners and ensure that there is transparency as well as built-in resilience at every stage of the supply chain. It has become more apparent as the world slowly goes back to normal that many businesses in the supply chain need to be future proofed by becoming more adaptable and flexible so that they can adapt quickly when disruption hits.
Fully integrated supply chain
Our CEO, Alan Looney, introduced our corporate slogan– ‘Passionate about Partnership’ in 2012. This was in response to the shifting changes in our business model as it became apparent that our customers’ requirements had altered. We identified that forming a strategic collaborative alliance was essential to many of our customers. NCC has evolved from a traditional chemical manufacturer’s representative to a customer focused chemical sourcing expert and a fully integrated supply chain partner for our client’s raw material needs.
In real terms, this means working to not just ensure we deliver the right product at the right time, but that we understand our customers goals and have the agility to deliver the right product at any time. We achieve this by analysing the vulnerabilities associated with specific supply chains and secondly work towards solutions that ensure a reduced impact to production when something inevitably does go wrong. Its moving from the risks of “just in time” to the comfort of “just in case”. Being a proactive partner, means that NCC is a reliable, consistent supplier across the many different industry sectors we service. While it is not possible to predict the future, but by analysing and planning, it is feasible that the potential impact of unplanned events can be mitigated.
Identifying vulnerabilities & prepare for disruption
If as an organisation you have not yet carried out a recent vulnerability analysis, then ideally this should be your first action in building a supply chain resilience plan. Mapping out all touch points of your supply chain on an annual basis may seem time consuming, but if done correctly it should highlight any areas that need to be addressed. An in-depth vulnerability analysis should include more than just first or second tiers, it should also include how the suppliers within these tiers interact with each other, to help expose any significant hidden risk. An example of this would be approving two suppliers of the same component/raw material. If due diligence is not properly done, it could come to light that both suppliers are sourcing from the same manufacturer or using identical manufacturing processes vulnerable to the same market challenges. Meaning that in the case of disruption that both suppliers would be unable to provide the required product. By utilising proper planning and having contingencies in place it is possible to mitigate the risk effectively and minimise any impact disruptions may have.
Secondary sourcing options
NCC is uniquely positioned to assist you with your second source projects, as a partner that has in-house sourcing and research capabilities to conduct manufacturer due diligence, as well as in-house operations and quality teams. NCC’s sourcing team are skilled in analysing the production of a raw material and researching the supply chains of the manufacturers offering this material. From ensuring different raw materials are used in the production of the chemical in question or doing our own supply chain analysis to identify if the proposed second source is supply chain independent to the original source – our clients can be assured that an effective, reliable second sourcing option will be chosen.
Managed additional stock
With products that are deemed high risk in your vulnerability analysis, then it is recommended that managed extra stock is stored. Though it does tie up finance and there is the risk of obsolescence, the costs that are associated with production down time (especially in pharma) pale in comparison to the expense. Savings from lean inventories and just-in-time supply chain practises are quickly diminished by lost revenue caused from production disruption and higher costs related to limited supply. If the additional stock is managed correctly and efficiently with planned rotation then, there need not be significant obsolescence. We recently published a pharma case study in which NCC sourced, facilitated and managed the storage of a key chemical on behalf of our customer in a secured facility. We have made certain that a consistent availability of raw materials has resulted in no down time at any stage. We have also assisted smaller sites with restraints on their storage capabilities to allow them to keep an external buffer stock.
Leveraging the position of your low value – production critical raw materials
A key part of supply chain resilience is ensuring all the stakeholders in the supply chain have a vested interest in maintaining the function of your company’s production objectives. A common mistake is focusing on high volume materials and mitigating any risks associated with them but, being unable to effectively reduce the risk of your lower value raw materials that are essential to your operations. This is often because a key stakeholder in the supply chain, for example a manufacturer does not view your requirement as integral to their sales plan. In addition, they also may not view your company as being a key client. As your supply chain partner, we can consolidate your requirements with other customers for the same material and leverage our own relationships with key manufactures to ensure these requirements are being treated with the same priority as your high volume/high value raw materials.
Failure to plan…
No one could have foreseen the combination of supply chain challenges that we are presently experiencing. That said it has stripped bare the vulnerabilities that exist, it is true that there is no fix all approach, however there are steps that can be taken that will soften the impact and blow. Doing so will not only cause less supply chain headaches but in turn will provide an advantage over competitors who may not be as prepared and flexible. We believe that it is now time to take a different approach, one which reflects the turbulence and unpredictability of this age. On one hand with low-risk materials utilising more lean inventories and just-in-time approaches. On the other with medium to high-risk materials improving resilience by having secondary sources lined up and additional managed stock to hand. Taking this perspective should reduce the risk and most importantly the associated costs.
Expertly managed end-to-end supply chain solutions
With over 50 years of experience, we provide our customers with end-to-end supply chain solutions. Regardless if the materials are sourced locally or globally, our goal is to provide full management and traceability of supply at every stage. By optimising the efficiency of your supply chain, we can save your organisation time, money, and resources.
We can assist your business with:
- Global supply chain management – experienced in building secure long-term transcontinental supply chains
- Researching of alternative sources, secondary sources & prevalidation of proposed novel supply routes
- Multi-location sourcing
- Regulation expertise
- Logistic flexibility
- Managed temporary and long-term storage
- Supply chain risk evaluation
- Comprehensive change control support throughout the supply chain
- Management and coordination of external service providers as required
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