Four ways suggested for companies to bolster supply chain resilience
Amidst the recent developments such as geopolitical crises, attention is increasingly turning to supply chain diversification. Yet, until now, there has been no clear definition and comprehensive framework for this approach. Rising to the challenge, DHL and leading academics have presented a new definition and a versatile model to explain this important and holistic concept in the latest DHL Trend Report, “Supply Chain Diversification”. Supply chain diversification is defined here as a proactive approach where companies incorporate one or several dimensions into their supply chains to minimise risk. This includes multi-shored supply networks, multi-sourcing, parallel modes of transportation, and concurrent or redundant logistics operations. The report also provides tangible customer case examples, enabling companies to assess their diversification level and devise a suitable strategy.
In the novel model developed by DHL in collaboration with Emeritus Professor Richard Wilding OBE, one of the world’s leading experts in logistics and supply chain management, four dimensions of supply chain diversification are illustrated:
Multi-Shoring: This involves spreading manufacturing and supplier locations across different regions or countries to mitigate risks. It includes duplicating manufacturing capabilities and using the same supplier in different locations.
Manufacturing & Supplier Network (Multi-Sourcing): Expanding the network to include redundant suppliers and manufacturing capacities to address financial and operational risks.
Modes of Transportation: Utilising multiple transportation modes simultaneously, covering all stages of transport, including first mile, long haul, and last mile, to diversify routes and reduce risk.
Logistics Operations: Expanding logistics infrastructure to include additional functions like hubs, warehouses and distribution centres. This may involve adding redundant capacity nearby and outsourcing certain logistics activities for diversification, said a release.
Source: Exim News Service: Bonn, June 25