In recent years, “resilience” has been a hot topic in the supply chain field. Today, businesses are looking for new ways to build, improve, or maintain resilient supply chains. While resilience should be incorporated into a company’s goals, it cannot be seen as the end goal and no company can claim, “We have achieved supply chain resilience!”
Lynn Torrel, Flextronics Chief Procurement and Supply Chain Officer, said: “The external environment is constantly changing, and businesses can face disruptions at any time. Therefore, a resilient supply chain is one that can recover quickly after an interruption event. The key here is to be “quick,” because how quickly a company can overcome an outage determines how resilient its supply chain is.”
In fact, resilience is not a “destination”, but a “competition”. In the case of Formula 1 racing, the sport has many similarities to building resilient supply chains, providing guidance to businesses that want to make them run as efficiently as a well-tuned race car.
Processes, tools and teams
Without the right processes, tools and teams in place, it will be difficult for businesses to win in the resilient race, as F1 knows all too well. They have tools (cars), teams (drivers, teams, and pit crews), and processes (race-day strategies). But having these three elements alone does not make a supply chain more resilient; they must also work in concert with each other. For example, an F1 team might have the most skilled driver and the fastest car, but poor pit strategy or a lack of chemistry between pit crew and drivers could cost them trophies.
Likewise, supply chains require tools that employ advanced technology to anticipate risk, and established processes that utilize those tools to make intelligent decisions, supported by a team of talented professionals. What follows is a look at how these three imperatives work together to win the elasticity race.
First, intelligent preparation
Disruption can happen at any time, and while businesses can’t predict exactly when it will happen, it’s critical to anticipate and prepare for what might happen. We can look at the way F1 teams prepare before a race.
Like complex supply chains, F1 teams must take into account several factors when preparing their race strategy. Teams are often required to travel to different circuits around the globe, each of which presents different challenges due to factors such as weather, climate and the number of laps the race will take around the track. After assessing these factors, the team can make an intelligent decision about whether to use soft, medium or hard tyres, as well as how often and when the driver will pit throughout the race.
At Flextronics, we use tools such as SimFlex to help customers intelligently prepare their supply chain “race strategy.” SimFlex is able to list all aspects of a manufacturing strategy and provide a detailed report on the cost of these decisions in different regions. Businesses can predict a variety of scenarios based on current and future inflation rates, crude oil prices, labor costs, and other macroeconomic indicators.
Another valuable tool is what we call “joint risk management,” which identifies potential component-level and supply-chain risks early in the product lifecycle and provides advice on how best to mitigate those risks. By addressing risks early in the lifecycle, Flextronics prevents risks from extending into the planning and construction phases. During the planning and construction phases, challenges surrounding procurement can result in significant additional costs, project delays and financial losses for Flextronics and the OEM.
While smart preparation makes it easier to identify risks in the supply chain, it is also becoming increasingly difficult to take effective action against those risks. This is why creating a decision-based framework can significantly enhance an organization’s ability to make informed risk decisions.