Strong Supply Chains Through Resilient Operations

CHAPTER 8Build Resilience Against Supply Shocks by Working with Supplier Ecosystems

Recent events have demonstrated the need for strong, resilient supply chains. But you can't just conjure them out of thin air. You need to transform your relationships with existing and new suppliers. Here are five ways to make that happen.

Turn Your Supply Chain into a Network by Developing Second Sources and Qualifying Backup Suppliers

Risks arise in your supply chain when you have a single source. If that source becomes unavailable, you're stuck—even if the item being supplied is relatively minor or substitutable. So to reduce risks, you want to reduce your single‐source dependencies.

This may feel counterintuitive. Under the lean philosophy, you wanted to find one incredibly efficient supplier and then maximize economies of scale. With increasing pressure on time to market, that instinct only grows. Who else could do this? But sometimes, dependency on a single supplier results from ossified bureaucracy. Have you taken approaches to make your products more “sourceable”? For example, you want to specify it as little as possible, explore increased tolerances, and otherwise give other suppliers a fair shake. Kearney research shows that two out of three supplier monopolies in engineering‐driven companies are customer caused.​ They focus on best technical solution and first to market due to ownership by engineering and sales. If you instead take a design for sourcing approach, you optimize product ...