How to build supply chain resilience ahead of a recession

The United Kingdom is teetering on the precipice of recession amidst the backdrop of a war that drags on in Ukraine, global shortages of goods and rapidly growing domestic inflation. Although the word has been used liberally over the past few years, it is fair to say the difficulties we’re experiencing are “unprecedented.”

But the impact of these difficulties runs deeper. At each step of the supply chain, new disruptions and risks are emerging. With each point in the chain dependent on the smooth operation and collaboration between supply partners, an inability to forecast and plan with confidence is debilitating.

To prepare adequately for recession – or any other economic disruption – companies must mitigate their exposure to risk by diversifying their supply chain networks and increasing transparency between potential partners. Just as dependence is dangerous, agility is assurance.

The Added Value of Supply Chain Networks

A learning that we carry forward from the pandemic is that business processes are becoming increasingly digitalised across all aspects of goods supply, from manufacture and site maintenance to last mile delivery.

Rather than relying on outdated linear supply chains, organisations today need to embrace digital transformation by implementing dynamic, network-enabled solutions that facilitate collaboration among all trading partners.

Visibility is a key component in mitigating the severe risks supply chains are facing. Shifting away from singular point-to-point interactions to network-driven, many-to-many collaboration enhances visibility substantially.

Organisations that are part of a network become both buyers and suppliers. They gain greater insight and bi-directional visibility into the interconnected operations of their trading partners.

Supply networks unlock greater collaboration, which in turn aids in the selection of future partners and supports performance through turbulent periods.

When operating in a supply network, organisations are directly connected with producers, vendors, distribution centres, warehouses, transportation companies, and retailers.

This transformative relationship with all parts of the supply chain provides additional security against events that cause disruption across industries.

Embracing Data Insights

Data has become one of the most precious commodities for businesses. As one report from Oxford Economics found, 51% of supply chain leaders are using AI and analytics to unlock insights.

Organisations operating within supply chain networks can tap into the combined intelligence generated by all trading partners within the business network.

This will enable them to view historical data on shipment types and routes, equipment information, product specifications and more, allowing them to identify trends, track KPIs, and benchmark with industry peers.

This is invaluable for enabling businesses to respond faster to unexpected changes in the market environment.

Because a business network provides visibility across the entire supply chain, companies can benefit from increased transparency and anticipate issues.

With this, they can react and adapt quickly, avoiding unnecessary costs due to shipment delays and other disruptions.

With global economic and social factors presenting new pressures daily, the ability to develop a robust and resilient supply strategy has never been more important.

Digital supply networks are constructed with resilience and risk mitigation in mind. Their power is in the utilisation of real-time data.

When harnessed by business leaders, digital tools allow for a complete understanding across all areas of a business.

Tony Harris is SVP and Head of Marketing and Solutions for SAP Business Network.