In the recent era, understanding of resilient & robust supply chain has become one of the major key concepts. It has become necessary to understand the supply chain department. It is due to the difficulty level during supply chain process is growing higher day by day. There is a probabilistic increase in risk is experienced by many of the organizations. However, previous literature studies related to supply risk management has revealed & approved empirically the basic concepts of resilient & robust supply chain.
As the probability of disruption increases in the supply chain, resilient strategies help to come out of the unforeseen disasters comfortably with the help of these strategies & can work out even better as they were before. Disruption can be prevented by focusing on the major factors that lead to disruption in the supply chain. The Material, financial & information flow are the three major factors involved in the supply chain process. An inconsideration between these three factors during the supply chain process can restrict the resilient strategies to work out significantly.
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This article is going to help students to get complete knowledge about the factors that affect the robustness and resilience of supply chain management.
What Is Supply Chain Robustness & Resilience?
When serious disruptions take place many supply chains collapse and take a long time to recuperate. Many of the rest continue their activity smoothly & satisfy their costumers before and after a disruption. There are frightful end results after disruption takes place in SCM. It includes suffering loses, mutilation of market share, etc., which increased the need level of having an integrated sight of Supply chain management robustness & resilience.
Today’s fluctuating and unrestrained markets ensure the exposure of supply chain noteworthy for most of the companies, as SCM process becomes more complicated which challenges to manage & reduce the risk factors by creating most significant resilient & robust supply chains.
What Are The Factors That Affect Supply Chain Robustness & Resilience?
As the world is progressively growing uncertain, there are many unforeseeable disasters which include natural & man-made disasters, such as, earthquakes, tsunamis, terrorism, wars, strikes, economic crises, e-virus attacks, etc. These disasters lead to a major disruption in today’s business as many of the supply chain administrators tries to enhance their financial performances through different strategies such as cost & asset reduction, JIT Inventory, etc. These initiatives are highly effective in today’s uncertain market.
Other than natural and man-made disasters there are other internal factors in terms of information flow that reacts in terms of disruption in SCM. Such flows are found in the form of material, financial & information flow. Material flows is defined as the physical movement of goods from supplier to customer, while LC, payment schedule, payment of bills on time, credit term & suppliers comes under financial flow. Ultimately updating all components of SCM & providing resources falls under information flow. This includes up to date inventory position, order delivery, transfers, etc.
Risk Associated With Supply Chain Management Process
Disruptions to the material flow in SCM are unforeseeable & rare but are dangerously damaging to all extents. Natural disaster, labour strikes, terrorism are some of the examples that directly affect the flow of material. There are certain risks with a material flow such as source, some of the typical issues are, single sourcing risk, supplier selection, supply product quality, supply capacity, sourcing flexibility risk.
Depending on a single source can lead an organization where customer’s demand cannot satisfy in case of natural disasters. Supplier selection, for now, has become one of the complex decisions in supply chain management. Outsourcing has become popular & significant for today’s SCM. Supplier capacity ensures that supply quantity meets demand towards consumer’s satisfaction. Sourcing flexibility risk may have benefits associated with it but also bring hidden costs & difficulties while switching suppliers.
On the production & deliver side supply meets demand is one of the main concerns of an organization. The misbalanced supply towards demand can lead to excess or shortfall inventory. This can be due to certain reasons, such as, rapid change in customer’s demand, fashion, short product life cycle, etc.
The Risk Associated With Material Flow
Disruptions to the material flow in SCM are unforeseeable & rare. They are dangerously damaging to all extents. Natural disaster, labour strikes, terrorism are some of the examples that directly affect the flow of material. There are certain risks with a material flow. This includes source, some of the typical issues are, single sourcing risk, supplier selection, supply product quality, supply capacity, sourcing flexibility risk.
The Risk Associated With Financial Flow
The main focus of financial supply chain management includes managing, planning & controlling financial flows associated with supply chain management. For smooth processing supply chain & finance manager’s interaction is much necessary. The external linkage is also as important as interlink activities. External interaction includes customers, suppliers & service providers such as banks etc.
Financial supply chain management enables decision-makers from the supply chain & finance to make certain important decisions as FSCM provides data in form of planning to make sure that decisions made are significant in nature. Interconnection is much important for both departments.
The Risk Associated With Information Flow
Information flow in SC in one of the top-rated concerns. It is due to lack of information flow. It can involve a high transactional cost if the information is not effective & efficient from the customer or supplier point of view. Information technologies applies to reduce the risk factor of information flow. It is because there is an emergency need for the information supply chain.
Information technology plays a vital role nowadays in major processes. It includes information sharing, better integration, access to global markets, global partnerships, changed production methods, improved customer service, enhanced collaboration, reduced transaction costs, product and service customization, increased agility, and real-time information capture.
