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Our series: Supply Chain Simulation / Part 11

How to manage supply chain disruptions

Supply chain disruptions come in many forms, from local issues such as staff shortages or a warehouse fire, to global issues such as the COVID 19 pandemic or the blockade of the Suez Canal in 2021.

For managers dealing with supply disruptions, the following questions arise:

What is the best way to manage disruptions?
What is the best way to prevent a disruption from happening in the first place?
What approaches and tools can help improve responses and resilience?

We will answer below how forecasting, planning, and developing mitigation strategies can help make supply chains more resilient and develop organizational agility if change is needed.

Causes of supply chain disruptions

The trend toward just-in-time (JIT) manufacturing, while economically attractive, has made today’s supply chains vulnerable to disruption. This approach favors narrow ranges at the inventory level and predictable deliveries, making the supply chain sensitive to delays and changes from normal operations. During periods of disruption, supply issues can quickly impact a company’s bottom line.

How can supply chain disruptions be avoided?

There are three interrelated aspects that help in dealing withsupply chain disruptions:

Visibility: knowing the end-to-end status of the supply chain and supply and inventory histories.
Analysis: understanding the data and identifying risks and opportunities.
Planning: developing appropriate operational and contingency plans (actions).

Taken together, supply chain visibility, analysis, and planning help increase resilience to disruption and flexibility in managing change.

Recognizing this is easy. But building a knowledge base and appropriate capabilities to implement it is not always so simple or straightforward. The problems start almost immediately when trying to model a supply chain using Excel spreadsheets.

Modeling a supply chain in Excel means a loss of detail and flexibility compared to modern supply chain design software tools. This affects predictive accuracy and makes it difficult to respond adequately to changes.

Supply chain design software increases supply chain resilience

To really get a handle on supply chain resilience and address the three issues above, leading companies are using specific supply chain design software tools. These tools can take into account issues that impact the entire supply chain, such as the ripple effects of an extraordinary disruption.

Extraordinary disruptions such as pandemics, floods, legal disputes, and strikes may be rare, but their impact on supply chain performance can be very large, and they very often have significant knock-on effects on sales and profits. Because the impact of extraordinary disruptions usually spreads throughout the supply chain, this phenomenon is known as the “ripple effect.” The phenomenon can have a significant impact on the business, and being prepared for it increases operational resilience.

Source: The AnyLogic Company

Would you like to learn more?

For a deeper insight, you can watch the video below. This video shows you how to stress test your supply chain in emergency situations using the Risk Analysis Experiment in anyLogistix.

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Delve deeper into the topic in our free web seminar on 29.09.2022.

Learn more about how dynamic simulation is proving to be the only reliable way to deal with supply chain uncertainties. Register for our web seminar on 09/29/2022 from 11:00 to 12:00:

Or simply contact our SCM expert Till Fechteler for an individual consultation.