FEDA NEWS & VIEWS
INDUSTRY INSIGHTS
Building Resilient Supply Chains Regula- tions
Diversifi cation, inventory management and supplier relationships form the three keys to combating disruption.
The last fi ve years have truly turned “supply chain resiliency” into a phrase every business executive should know. Even beyond the supply chain shortages caused by the pandemic, just the last few months have seen the impact that
two major hurricanes and labor unrest at key ports can wreak on supply chain operations. Foodservice equipment and supplies dealers are especially affected by disruption because they play a pivotal role in linking manufacturers and customers. As the global economy becomes even more interconnected and faster paced — thanks in part to the promise of artifi cial intelligence technologies — dealers’ ability to ensure timely, cost-effective deliveries will only become more closely tied to their supply chain resiliency. Unfortunately, there are no simple-to-implement solutions. Preparing for future disruptions is complex, requiring careful resource investment and allocation while planning for events that may never occur. A multi-layered approach is essential to ensuring that supply chains can endure and recover quickly from inevitable disruptions. Beginning earlier this year, I’ve had the pleasure of working with the FEDA Future of Distribution Council to help identify some of those potential approaches. Here are some of the key strategies for strengthening supply chain resilience I’ll be exploring with FEDA members as we continue this important initiative in the coming year.
Upstream Diversifi cation Creates Agility One of the most effective ways to build supply chain
agility, and thus resilience, is through the diversifi cation of upstream supply chain partners. Relying solely on one manufacturer, supplier or logistics provider exposes businesses to signifi cant risk. By cultivating a network of multiple suppliers across different regions, dealers mitigate the impact of localized disasters. Our recent history provides the perfect case study for how this strategy can be invaluable. When the COVID-19 pandemic shut down entire regions’ supply chains, dealers in the pharmaceutical and personal care industries that had invested in diversifi ed supply networks were able to pivot quickly and source goods from alternative areas. But
6 FEDA News & Views
it is not just where the goods come from, it’s how they get there. Recent hurricanes disrupted major highways and ports along the Gulf and East coasts, but dealers with pre-arranged alternative routes or a portfolio of logistics providers continued to meet customer demand, albeit with minor delays.
Strategic Inventory Management is Key Effective inventory management is another pillar of
resilience. Carrying too much inventory ties up capital and increases costs, while too little leaves dealers vulnerable to shortages. The best companies segment inventory by volume and value with a focus on high-demand, high-margin items, and then build up suffi cient stock of products with long lead times. Incorporating data analytics and predictive tools into the process further strengthens resilience. Leading fi rms track data on external factors, such as weather patterns and political conditions, and use analytics to forecast disruptions. This proactive approach ensures that, even in the face of disruption, dealers are equipped to maintain service continuity.
Strengthening Supplier Relationships:
T e Winning Strategy Building closer, more collaborative relationships with suppliers is perhaps the most effective means of building supply chain resilience. Strong partnerships can lead to preferential treatment during disruptions, including expedited shipments and alternative sourcing options. Open communication channels and joint forecasting with manufacturers help align expectations and mitigate risks. Further, partnering with suppliers committed to building their own resilience — those with disaster recovery plans and diversifi ed production facilities — will strengthen the entire supply chain. Building resilience requires a continuous focus on
diversifi cation, strategic planning and operational agility. By fostering strong supplier relationships and managing inventory effectively, distributors can not only survive but thrive in an increasingly unpredictable world.
Chad Autry, Ph.D., is the Myers distinguished professor of supply chain management at the University of Tennessee-Knoxville.
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