Resiliency describes the ability to withstand difficult conditions. According to some, it could also describe the way in which supply chains should be designed to limit disruptions in the face of unexpected conditions.
Global supply chains were shaken amid the outbreak of COVID-19, as widespread societal and economic uncertainty caused demand for essential supplies to skyrocket. Even the most established suppliers were put to the test to come up with solutions to stay ahead of the fast-changing ebb and flow of supply and demand.
According to an article from Harvard Business Review, the COVID-19 pandemic has proven that supply chains worldwide simply aren’t resilient enough to absorb major disruption. According to the authors, “As governments and health care agencies work to stop the spread of COVID-19 and to treat those who are infected, manufacturers in more than a dozen industries are struggling to manage the epidemic’s growing impact on their supply chains. Unfortunately, many are facing a supply crisis that stems from weaknesses in their sourcing strategies that could have been corrected years ago.”
Global consulting firm McKinsey & Co. concurs, saying that the long-term effects will include the need for businesses to figure out how to operate in new ways. The firm describes this as resiliency—the ability to absorb a shock and to come out of it better than the competition.
One implication of this, says McKinsey, involves the way in which supply chains operate. In other words, many companies found themselves in a vulnerable position amid the crisis due to the fact they could not get the parts they needed when they needed them. Supply chains built on just-in-time inventory and distributed component sourcing may need to be reconsidered, says McKinsey, with companies forced instead to build better backup plans.
It centers on the question: “How can we forge a supply chain that creates the most value?” According to McKinsey, this involves creating greater visibility and capacity, capability, inventory, demand, and risk across the value chain. It can also mean building localized supply chains and creating more collaborative relationships with suppliers.
Resiliency in Action
With more than 100 locations, Ryerson is a supplier that fits the criteria of a supply chain based on the foundation of resiliency. Strategically placed locations help provide customers with local presence along with national scale to create the ideal supply chain solution. Among other things, this creates resiliency in the network, ensuring that if supply is not available in one location it can be typically be sourced quickly and without disrupting the flow of goods.
This proved critical for a customer making ventilators during the COVID-19 pandemic. The manufacturer contacted the Ryerson location in Minnesota on a Tuesday afternoon in need of a truckload of 304 stainless steel to be delivered that same week on Friday.
The material was not available at Ryerson’s Minneapolis facility. In fact, the nearest truckload was more than 900 miles away in Indiana. The sales representative worked with the team in that location, which could process the material the next morning (Wednesday), and with the transportation supervisor who took care of getting a truck lined up to pick up on that afternoon. The order was set up as direct delivery to the customer. The company received material on Thursday afternoon – one day ahead of schedule.
In another instance, a company that manufactures IV stands began seeing demand accelerate early on during the pandemic and needed to get parts fabricated and shipped faster than usual.
Complicating matters was the fact that the material needed, 20-foot long polished stainless steel tubing, had limited availability. Tapping into its broad network of partners, Ryerson was able to find multiple suppliers across the United States. Furthermore, Ryerson’s relationships helped work around some standard hurdles in the process. For example, the plants with the supply had a policy not to unload 20-foot long product out of a van but agreed to do so for these rush orders due to the urgency of the matter.
Once the material arrived at Ryerson, the tube laser operator and scheduling team prioritized the orders. Some of the orders were picked up by the customer, some were put on special couriers to get there faster, and some went on scheduled route trucks.
Truth be told, it is impossible to prepare for the unexpected. But with a bit of resiliency in your supply chain, it can be easier to be pivot as market conditions dictate.