With the global economy as interconnected as it is, supply chains are more exposed to disruption than ever. Managing them is no simple task, and avoiding risk factors is a challenge all on its own. Yet, as recent years have demonstrated, building resilience is critical to maintaining a thriving operation.
In this guide, we’ll explore supply chain resilience, why it’s essential, and how you can build and sustain it. Read on to learn the ins and outs of resilient supply chain management and how it can help your global business.
What Is Supply Chain Resilience?
According to Gartner, supply chain resilience is an organization’s ability to adapt to structural changes by modifying strategies, products, and technologies. It encompasses both the robustness to withstand disruptions and the agility to adapt quickly to changing circumstances, ensuring minimal impact on production and delivery. Gartner defines agility as the ability to sense and respond to unanticipated changes in demand or supply quickly and reliably without sacrificing cost or quality.
Resilience is closely tied to supply chain risk management (SCRM). While SCRM focuses on proactively identifying, assessing, and mitigating potential risks, resilience ensures the supply chain can withstand and recover from them. The latter also enhances supply chain performance by minimizing future disruption, maintaining consistent service levels, and optimizing efficiency, even during unforeseen challenges.
Why Is Supply Chain Resilience Important?
Per Gartner, the COVID-19 pandemic opened many organizations’ eyes to the power of supply chain resiliency. In 2021, 87% of supply chain leaders planned to invest in building resilience within the next two years.
Indeed, organizations need resilient supply chain operations to withstand turbulent events like natural disasters, geopolitical conflicts, supply shortages, or customer demand fluctuations. These risk factors are each a source of potential disruption and can come at a significant cost.
The Economist reports that supply chain challenges cost organizations an average of 6-10% of their annual revenues, not to mention reputational damages. How? Disruptive forces complicate supply chain logistics, often leading to shipping delays, unexpected expenses, and other negative impacts.
Worse yet, disruptions are happening more frequently, according to the Business Continuity Institute. In 2024, 80% of supply chain leaders experienced a disruption within the past 12 months, with many experiencing up to 10 — an increase from the previous year.
Given these factors, more businesses are taking resilience measures seriously. With a resilient supply chain, organizations can:
- Protect revenue: Resilience strategies help avoid costly downtime or production delays, maintaining steady revenue streams for financial security.
- Improve customer trust: Proactive measures ensure consistent product availability and delivery timelines, meeting customer expectations and boosting satisfaction.
- Reduce costs: Resiliency minimizes the expenses associated with expedited shipping, production stoppages, and lost sales.
- Increase competitiveness: Companies that quickly recover and continue operations gain a competitive advantage over less prepared industry peers.
How Does Supply Chain Resiliency Work?
Whether you’re talking about global supply chains or local logistics, resiliency typically follows a three-phase process:
Readiness
Readiness is the proactive phase, where organizations prepare their supply chains to withstand potential disruptions. This stage involves identifying vulnerabilities, assessing risks, and implementing preventive measures to build strength and resilience. For example:
- Risk assessment: Supply chain managers may conduct regular evaluations to understand potential risks, such as supplier dependencies or pending legislation.
- Contingency planning: They may also develop contingency plans for high-risk scenarios, detailing steps to be taken in case of disruptions. That way, teams can act at a moment’s notice.
- Resource allocation: Supply chain leaders often establish safety stocks, backup suppliers, and flexible logistics options to buffer against inventory disruptions.
- Training and drills: Teams can prepare for different scenarios through training exercises, role-playing, and simulations, so they know how to act in emergencies.
Ultimately, the goal of readiness is to minimize the impact of a future disruption by preparing in advance, ensuring the supply chain can pivot as needed.
Response
The response phase begins when a disruption occurs, requiring immediate action to contain the impact and keep operations running as smoothly as possible. This can involve:
- Real-time decision-making: With supply chain technology, organizations leverage data and insights from visibility tools to make informed choices on rerouting, production scaling, or order prioritization.
- Stakeholder communication: They may keep suppliers, partners, and customers informed about the disruption and response measures to manage expectations, maintain trust, and limit reputational damage.
- Reallocation: Leaders can move resources, such as labor or materials, to the areas where they are most needed to ensure business continuity.
An effective response phase aims to reduce downtime, limit financial losses, and maintain service levels wherever possible.
Recovery
The recovery phase focuses on returning the supply chain to normal operations and applying lessons learned from the disruption. This phase involves repairing damage, replenishing resources, and analyzing the effectiveness of the response to strengthen future resilience. Key actions in the recovery phase include:
- Restoration: Bringing production, logistics, and inventory levels back to pre-disruption conditions.
- Re-engagement: Rebuilding relationships and renegotiating contracts with suppliers or logistics providers if necessary.
- Post-event analysis: Reviewing the disruption’s impact and assessing the effectiveness of the response to identify improvement areas.
- Continuous Improvement: Updating contingency plans, implementing process changes, and refining risk assessments based on lessons learned to enhance readiness for future disruptions.
Critically, recovery isn’t just about returning to normalcy. It’s also about ensuring supply chain optimization. By gathering lessons learned and applying them, organizations can enhance their supply chain resilience strategy with short- and long-term improvements.
4 Pillars of Supply Chain Resiliency
Today’s global supply chains are ever-expanding and interconnected systems. Building resilience is often easier said than done — but fortunately, there are a few focus areas where you can start the journey.
According to Deloitte, here are the four pillars of supply chain resilience:
1. Visibility
Supply chain visibility is the power to monitor and track all aspects of the supply chain in real time. From raw materials and production to logistics management and final delivery, it’s about affording a clear line of sight into your supply chain operations.
Strong visibility allows organizations to:
- Identify disruptions early: Supply chain visibility can help spot potential issues like delays, shortages, or quality concerns before they escalate.
- Enhance decision-making: With access to real-time data, companies can make informed adjustments and respond quickly to changes.
- Increase accountability: Tracking performance metrics for suppliers, shippers, and internal processes promotes accountability and helps ensure standards are met.
There are many supply chain technologies to help maximize visibility. Take the Internet of Things (IoT), for instance. IoT sensors can collect valuable data analytics, providing comprehensive insights across key links in the value chain.
2. Flexibility
Flexibility is the capacity to adjust operations quickly in response to changes, such as demand fluctuations or shifts in market conditions. It allows organizations to:
- Adapt production: Supply chain leaders can scale up or down based on customer demand or supply availability, avoiding excess inventory or stockouts.
- Switch suppliers or routes: In the event of a disruption, companies can pivot to alternative suppliers or transportation methods.
- Adjust workforce: Flexible staffing solutions allow companies to reallocate resources or bring in additional talent to meet production needs.
3. Collaboration
Collaboration emphasizes the importance of strong relationships and open communication with suppliers, logistics providers, and other stakeholders. Effective collaboration helps organizations:
- Coordinate responses: In a disruption, collaborative partners can work together to ensure business continuity by prioritizing shipments or reallocating resources.
- Share risk information: Close partnerships make it easier to exchange data on potential risks like resource constraints, allowing for proactive solutions.
- Build trust and reliability: Frequent communication and mutual support foster trust, leading to more resilient and cooperative supply chains.
For example, organizations might enhance collaboration through shared risk assessments and joint crisis response planning. Ultimately, such actions keep parties aligned and on the same page.
4. Control
Control refers to an organization’s ability to manage and direct its supply chain processes and resources effectively. This pillar is about maintaining oversight, enforcing standards, and ensuring compliance across all operations. Strong control enables organizations to:
- Maintain quality standards: Consistent quality control and compliance monitoring minimize issues that could disrupt the supply chain.
- Enforce policies: Control mechanisms ensure suppliers, logistics providers, and internal teams adhere to agreed-upon standards, reducing variability.
- Implement strategic adjustments: It also allows companies to make targeted improvements to their supply chain processes, enhancing efficiency and resilience over time.
Enterprises often support the control pillar with standardized processes, regular audits, and clear contractual agreements with suppliers and partners.
How To Build a Resilient Supply Chain
Not sure where to start your supply chain resilience strategy? Don’t worry. Here are six actionable steps you can take to get the ball rolling:
- Diversify suppliers and sourcing locations: Avoid dependence on a single supplier or region by establishing a network of diverse suppliers. That way, if a critical link in your chain experiences a disruption, it won’t necessarily hinder your supply chain performance.
- Increase inventory buffers: Maintain safety stocks of critical materials or finished products to handle demand surges. This allows you to capitalize on big opportunities to maximize revenue and meet customer expectations.
- Invest in technology: Use real-time tracking, predictive analytics, and artificial intelligence for supply chain visibility and risk forecasting. These tools are valuable assets in spotting potential threats before it’s too late.
- Strengthen supplier relationships: Collaborate closely with suppliers to ensure transparency, flexibility, and shared risk strategies.
- Implement reshoring: Move production closer to home to reduce risks associated with global logistics, such as shipping delays or political instability. For more information, check out our guide on reshoring your manufacturing operations.
- Conduct regular risk assessments: Evaluate potential disruptions and update contingency plans periodically to address new risks. The threat landscape is always evolving, so your resilience measures should be, too.
Strengthen Resilience With Workforce Solutions
Enhancing supply chain resilience requires a combination of strategic planning, robust processes, and the right partnerships. At Supply Chain Resources Group (SCRG), our strategic workforce solutions help manufacturers build stronger, more adaptable supply chains. Whether reshoring operations or optimizing overseas production, we can support your business with:
- Talent on Demand: SCRG’s Talent on Demand provides a flexible, contingent workforce solution, delivering skilled personnel exactly when and where they’re needed. This approach allows you to efficiently handle fluctuating labor demands while maintaining operational continuity and cost efficiency.
- Recruiting: Building a resilient supply chain requires skilled professionals in areas like engineering, machine operation, and project management. Our recruitment services help you find the most qualified candidates to meet your supply chain and manufacturing needs, ensuring your workforce is equipped to adapt to challenges and drive operational success.
- Supplier Selection: A resilient supply chain depends on reliable supplier relationships. SCRG’s Supplier Selection services guide you in identifying and vetting domestic or foreign suppliers for specialized components, high-tech parts, and other critical needs. With our rigorous evaluation process, we help you build a dependable supply network, reducing vulnerabilities and enhancing stability.
If your organization is ready to build a more resilient supply chain, SCRG is here to help. Contact our team today to get started.