Challenges and Solutions in Global Supply Chains

1. Introduction

The term “resilience” can be very vague and broad, and evaluating it in a supply chain context needs systematic analytics and indicators. By boiling down the performance of a resilient supply chain, we can have profit-centric measures, customer-centric measures, and internal efficiency measures, which categorize three dimensions of resilience: robustness, agility, and responsiveness. Robustness measures how well the supply chain can handle and resist changes of state, for example, disruptions in the operation of the supply chain. Agility measures how well the supply chain allows for rerouting of resources, for example, being able to switch suppliers in response to changes in the manufacturing plan. Responsiveness measures how quickly the supply chain can return to a steady operational state given an external disturbance. Each of the measures can define different elements and types of resilience, and it will all depend on the perspective of the company’s operation.Whilst different literature seems to provide different definitions and metrics for supply chain resilience, they will all revolve around the same idea, which is the ability of a supply chain to return to a desired level of performance after it has been disrupted by an unexpected event. When supply chain disruptions carry more severe consequences such as damages to revenue, loss of market share, or companies’ reputational damages, the ability to recover and the speed of recovery are crucial. Hence, the concept of resilience involves not only the capability to absorb temporary damages but also the ability to reconfigure and recover so that the supply chain will sustain and thrive in the long run.An integral part of the logistics industry is managing the movement of goods throughout the entire world, or global supply chains. The importance of these global supply chains in today’s society requires them to be efficient and effective, but in many of the popular supply chains today, this is not necessarily the case. Given the advent and ongoing spread of the global COVID-19 pandemic and the resulting severe regional and international shutdowns and restrictions, as well as the increased emphasis on environmental protection and social responsibility, the notion of resilience in global supply chains is becoming ever so crucial and important.

1.1. Overview of global supply chains

It is almost impossible to think of a final product that does not involve global supply chains at some point of its manufacturing process. Global supply chains refer to the production and distribution of goods, starting from raw materials all the way to the final product, in a way that adds the most value at every stage and serves the end customer most effectively. In recent years, as companies strive to become more efficient in meeting customer needs, global supply chains have become a major area of emphasis. For instance, there are more and more degree programs offering specialization in global supply chains, due to the increasing demand for people who could make good strategic decisions and manage the flow of materials in a cost-effective manner along the supply chain. With the continuous advance in technology and globalization, the scope and complexity of global supply chains will only become larger and more intricate. For example, the development of the internet and information technology has been used to ‘shrink’ the supply chains, because now companies are gradually building competitive edges by offering customers what they want, how they want it, at the lowest price and in the fastest time possible. On the other hand, globalization should imply longer supply chains because of the involvement of more and more countries, from suppliers of raw materials, manufacturers, wholesalers, retailers to end consumers. With the emergence of new markets, especially in the developing world, we could expect to see even more complex supply chains in the future. The significance of global supply chains could also be evidenced by the amount of managerial attention and capital investment that it has been receiving. Which of course makes sense – a lot of your cash can be tied up along the chain! And also, by managing it effectively, a company could improve the balance between revenue and costs. Ergo, a comprehensive understanding of global supply chains will be beneficial to professionals in so many different ways. However, as pointed out by Monczka and Morgan, no matter what your company strategy is, effectively managing supply chains could make the difference between success and failure. In the upcoming sections, which might be beneficial for the reader to know where the potential issues are and how a particular supply chain could be improved, we will discuss the challenges faced by global supply chains and how these challenges can be confronted.

1.2. Importance of resilient supply chains

It’s not good enough to have a standard level of resilience measures in place; best practice would be to have regular testing and assessment of the vulnerabilities of a system, security experts say. This approach, known as ‘stress-testing’, is where the chain is put under the pressure and scrutiny of a simulated disruption event so that issues can be ironed out, before it’s too late. Specialist insurance product can help to implement this ‘stress-test’ regimen, and paints a useful picture of how the capabilities and considerations of stakeholders within the chain can vary.Resilience, essentially, is the ability of a supply chain to anticipate, adapt to and/or recover from an external hazard. These hazards can include natural disasters, such as earthquakes or hurricanes, but also human-centric dangers, like terrorism or theft. This means that there is a broad range of issues that can create a disruption. Resilience will differ from supply chain to supply chain and, indeed, for a single supply chain over time. It will need to be adapted to consider both dynamic and evolving sources of disruption and also physical changes to the chain itself.Resilient supply chains are critical to the success of businesses and the economies in which they operate. It is not simply a case of providing a buffer against disruption; it is about providing a competitive advantage that can drive economic growth. These are the words of the UK’s Chartered Institute of Procurement and Supply (CIPS), highlighting the importance of resilience in the wake of global disruptions, such as the COVID-19 pandemic or large-scale cyber-attacks. CIPS is a not-for-profit organisation that provides training to professionals working on supply chain management.

2. Current Challenges in Global Supply Chains

2.1. Disruptions in supply chains

2.2. Shortages of essential goods

2.3. Logistical bottlenecks

3. Root Causes of Challenges

3.1. Impact of pandemics on supply chains

3.2. Geopolitical tensions and their effects

3.3. Reliance on single-source suppliers

4. Strengthening Supply Chains

4.1. Importance of resilience in supply chains

4.2. Diversification as a strategy

4.3. Near-shoring and its benefits

4.4. Technology adoption for supply chain optimization

5. Proposed Solutions

5.1. Enhancing supply chain visibility

5.2. Strengthening supplier relationships

5.3. Investing in risk management strategies

5.4. Collaborative approaches in supply chain management

6. Conclusion