Resilience in supply chains has emerged from Covid-19 as one of the key success factors for business operations. Amit Singh and Ramakrishnan Kasinathan, leaders at management consultancy Nexdigm, outline four ways how internationally operating companies can enhance the adaptability of their supply chains through smarter sourcing.
For decades, the globalization of manufacturing has been one of the main trends within supply chain. By outsourcing or offshoring activities, companies can lower costs and increase competitiveness. These benefits for long outflanked the risks that come with offshoring, such as more complex supply chains and vulnerability to potential instabilities.
However, the Covid-19 pandemic challenged the decade-long notion, with resilience becoming the key driver for adapting supply chains in order to effectively face new realities.
The pandemic resulted in global economies implementing trade restrictions, closing ports and airports alike, which exposed vulnerabilities in production and supply chain strategies. Essential products such as pharmaceuticals, medical supplies, and other essential goods were stuck when needed the most.
A pandemic combined with numerous geo-political trade tussles constrained the flow of goods. As a result, manufacturers scrambled to reassign production capacities, find new resources, and reduce dependency on suppliers projected as risky.