1. Consciously manage dependencies: lack of alternative sources of supply puts companies in undesirable dependencies. They increase the vulnerability of supply chains and limit the possibilities to quickly restore supply chain function. Central product and material groups should therefore be able to be procured from different sources. Where possible, single sources should be avoided. In the case of monopolistic markets, technological substitutes should be explored.
2 Strengthen supplier relationships: When supply chains break down, relationships with suppliers have an impact. A relationship based on partnership can determine whether a company is given the benefit of the doubt over other buyers. Supplier relationships should therefore be strategically strengthened. This is done either through contractual agreements or through strategic cooperation at the technological level.
3. Regionalise globally: Many purchasing organisations have been focusing on global supply chains or "global value sourcing", especially since the turn of the millennium. The primary goal was to reduce the total cost of ownership. However, globalisation is not an end in itself, but is also associated with costs in view of a changed global risk landscape. In order to secure the ability to deliver, it can make sense to also build up regional suppliers. Globally operating companies benefit from global regionalisation, i.e. the establishment of sources close to their respective production sites.
4 Further develop product architecture: Complexity is a significant driver of business risk. If a factory assembles 500 different parts in one production, the probability that one will not be delivered on time and correctly is much higher than with 100 parts. The development of adequate product architectures is thus one of the most important levers for reducing supply chain risks. Components should also be procured through multiple supply sources. An appropriate product architecture and, if necessary, modularisation require extensive cooperation with development, production, but also suppliers. The procurement organisation can act as a driver and facilitator for such cooperation.
Risk identification and management
5. increase supply chain transparency: In order to be able to react to emerging supply chain risks, they must be made transparent. This requires an understanding of one's own supply chains far beyond direct suppliers, which is often required for governance reasons alone. Furthermore, the visualisation of global supply chain risks helps in their identification and management. Modern digital solutions often lead to a performance leap in transparency.
6 Implement a risk radar: Risks should also be anticipated before they can affect supply chains. It is advisable to implement tools such as risk radars and embed them in processes to detect new and evolving risks. Even a few days' lead on the occurrence of a risk event can make the difference between supply chain collapse or continuity.
7. anchor supply chain risks in enterprise risk management: Supply chain resilience can only be increased if it is given company-wide importance and is an integral part of the overarching ERM process. The handling of evolving risks must be clearly and consistently defined across different corporate functions. Procurement, as an expert in quantifying elusive aspects in total cost comparisons, can act here as a thought leader for the quantitative assessment of risks across all business functions.
Supply chain recovery capabilities
8. increase the adaptability of the SCM function: Operational logistics and purchasing departments can at best "put out fires" when undesirable events occur. The adaptability of SCM functions, on the other hand, can be increased by aligning the handling of supply chain disruptions directly with strategic product development. In hpo organisational design, this corresponds to a central principle of designing high performance organisations: the consistent separation of strategic activities and day-to-day business.
9. Have task forces ready: Many companies have had good experiences with the use of task forces. Companies should fundamentally consider how they can mobilise the necessary forces at short notice to restore supply chains in the event of widespread disruptions.
10 Raise awareness of internal and external communication: Supply chain recovery requires good communication between all affected parties and stakeholders - be it production, development, suppliers or management. Speed and effectiveness of communication are crucial in this regard. It is therefore a must for SCM departments to define communication processes and content in a stakeholder-friendly way and to optimise them in terms of efficiency. If necessary, communication skills must be developed.