Breaking the reactionary cycle by investing in supply chain resilience
Abstract
Eighty per cent of companies are unprepared to quickly address disruptions and their operations are not structured to absorb disruptions over the long term, according to a recent Boston Consulting Group (BCG) survey. These companies need to strengthen their resilience — the ability to quickly identify and assess risks, react fast and absorb the impacts of disruptions across the supply chain. Although the pandemic-induced supply chain challenges are easing, now is the time for supply chain leaders to reinforce their commitment to resilience. Each company should determine the optimal level of supply chain resilience in its specific circumstances and risk profile. This paper sets out a wide variety of actions to build resilience. Investments that allow companies to ‘absorb’ disruptions (for example, network design, multisourcing, product redesign and inventory) are costly to employ across the board, so a targeted approach is necessary to maximise return on investment. Investments to ‘recover’ from disruptions (monitoring and sensing, predictive modelling and crisis response) can be cost-effective and offer the promise of a first-mover advantage when crises occur. All companies need both absorb and recover capabilities. Our research finds, however, that few companies excel in all these dimensions, and the frontrunners are investing to increase their advantage. Companies can apply these capabilities to define a strong resilience strategy. Steps include gaining visibility into your extended supply chain, quantifying potential disruptions and the cost of actions to reduce the associated risks, and understanding your current level of resilience and how resilient you want to become. With this information, supply chain leaders can secure the investment they need.
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Author's Biography
Ben Aylor is a core member of Boston Consulting Group’s Health Care and Operations practice areas and the global co-lead of BCG’s Operations Resilience topic. He is also BCG’s global topic leader on network strategy for pharmaceutical manufacturing and has extensive experience with both strategy and operations projects across industries, including corporate strategy, manufacturing network designs, enterprise and operations transformations, make/buy analyses and sourcing strategies. Ben’s current focus is on helping clients build their capabilities in new areas such as digital supply chain and resilience, and meet the challenges of major change efforts including post-merger integrations and broad transformations. Before joining the company, Ben worked at Arthur Andersen Business Consulting.
Dustin Burke is the Global Co-Leader of Boston Consulting Group’s Manufacturing and Supply Chain topic, part of BCG’s Operations practice. He is the Global Leader of Supply Chain AI, BCG’s digital supply chain accelerator, which includes data scientists, designers, technology experts and application developers. Dustin’s client work focuses on end-to-end supply chain transformations, digital supply chain, post-merger integration and distribution and logistics strategies for consumer and industrial goods companies. He also advises carriers, infrastructure providers and principal investors active in supply chain and logistics across transportation modes on operational and strategy topics. Dustin has written on advanced analytics and big data in supply chain and logistics, the impact of changing trade regimes on manufacturers in a range of industries, global trade flows, shifts in relevance for US ports and the growth agenda for freight railroads, among other topics. He is a TED presenter and has spoken at CSCMP among other conferences. Before joining BCG, Dustin held positions at MGM Resorts and Citigroup.
Jeremy Kay leads Boston Consulting Group’s Operations practice in the Great Lakes area and co-leads the operational resilience work globally. He has more than two decades of hands-on operations experience, specialising in supply chain, procurement and cost excellence topics. Jeremy has particular expertise in direct materials procurement within industrial goods. Throughout his career, Jeremy has helped his clients identify, design and/or execute programmes that created more than US$6bn of value. Jeremy primarily serves manufacturing clients across several industries, focusing on industrial goods and automotive. He has also led large-scale cost transformation and supply management strategy cases in the aerospace, defence, consumer goods and energy industries. Before consulting, Jeremy held positions as Purchasing Manager at Navistar, Commodity Manager at TRW Automotive and Commodity Manager at Federal-Mogul. He is a Certified Professional in Supply Management and member of the Institute for Supply Management.
Citation
Aylor, Ben, Burke, Dustin and Kay, Jeremy (2023, June 1). Breaking the reactionary cycle by investing in supply chain resilience. In the Journal of Supply Chain Management, Logistics and Procurement, Volume 5, Issue 4. https://doi.org/10.69554/OHJI5953.
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