As supply chain professionals and corporate leaders digest the lessons of COVID-19 and work on making their supply chains more resilient for the future, many are emphasizing the need to reduce their dependence on Chinese suppliers by reshoring or nearshoring manufacturing and supply chains.
This is putting the cart before the horse—or the shipping container before the ship. A large corporation cannot chart a course toward greater supply chain resiliency until it has thoroughly mapped its existing supply chains. Without an accurate map, reshoring and nearshoring strategies will be vulnerable to hidden weaknesses like sole-source dependencies far upstream in the second or third tiers of a supply chain.
The Wall Street Journal and other business media have reported that before the pandemic, many companies that shifted their sourcing from China to other countries actually remained dependent on Chinese companies to supply their non-Chinese suppliers.
On the other side of the coin, a company that has invested in mapping can easily identify which of its Chinese suppliers already have manufacturing sites outside China—giving the company an inexpensive and relatively fast reshoring option. Resilinc’s database of more than 80,000 Chinese suppliers shows that about 30% have alternate offshore manufacturing sites.
The importance of deep supply chain mapping is not a new idea to anyone in the supply chain profession who’s reading this. Supply chain experts have been talking about the importance of mapping for many years. Earlier supply chain disruptions like the two major natural disasters of 2011—Japan’s earthquake and tsunami and Thailand’s floods—helped to heighten interest in multi-tier mapping.
And now, on the heels of disruptions caused by COVID-19, tariffs, and geopolitics, the importance of mapping has been brought back to the table. Luckily, technology and software have advanced dramatically in the last decade, and the companies that have invested in supply network mapping have discovered the value of the map is greater than the cost and time to develop it.
Resilinc’s multi-tier mapping solution is currently being used by today’s largest global organizations, enabling them to visualize their entire supply chain, down multiple tiers. By having visibility into the structure of their supply chains, down to the second and third tier supplier level, these organizations have a lot of information at their fingertips within minutes of a potential disruption. They know exactly which suppliers, sites, parts, and products are at risk, which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites.
While extremely important, mapping is not the only element of a mature resilient-stage supply chain risk management program. Other elements should include: real time event monitoring and alerts; proactive risk mitigation strategies optimized by revenue impacts vs. cost/spend; cross-functional collaboration to set goals and execute mitigations; and using supply chain risk insights to inform product design decisions.
But the journey to a diversified, risk-adjusted supply chain network strategy begins with mapping.
To learn more about Resilinc’s Multi-Tier Supply Chain Mapping solution, please contact us.