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Establishing a Flexible Digital Supply Chain
Prior to the COVID-19 pandemic, supply chain resiliency had become an important issue due to disruptive natural disasters and geopolitical disputes, especially tariffs and trade wars. Despite the growing likelihood and severity of supply chain disruption, the primary metric companies traditionally used to evaluate suppliers is lower cost, not the impact of disruption on both cost and revenue.
Although it’s easy to see that supply chain resiliency is critical now, until recently this was largely ignored by most companies. Supply chain experts
and analysts have been warning for the past five years that resiliency is the most important characteristic of the modern supply chain
but very few manufacturers took decisive action. In fact,a survey conducted by Resilinc in late January and early February
, immediately following the Covid-19 outbreak in China, 70% of 300 respondents said they were still in data collection and assessment mode, manually trying to identify which of their suppliers had a site in the specific locked-down regions of China.
Many companies already knew that their supply chains were too dependent on single suppliers for given components. They understood that flexible and digital supply chains should have been a clear priority. But they were also bogged down by legacy infrastructure issues with the lion’s share of their IT spend going toward sustainment.
Manufacturers now need to build out digital and flexible supply chain capabilities to ensure they proactively pivot to future disruptions. Secure platform-based supply chains need to guarantee the continuity of product supply and collaboration to meet their customers’ expectations.