In today’s world where major global trade disruptions are more the norm than the exception, organizations are increasingly understanding that they have to assess their international business strategy at least on an annual basis, if not more frequently, in order to strengthen supply chain resilience and propel their global growth momentum.
That was the main takeaway from a recent webinar entitled “How to Address Emerging Waves of Disruption and Enable Business Growth”, co-organized by Descartes Systems Group and leading global trade association, Women in International Trade Northern California (WIT-NC).
Key speaker, Jackson Wood – Descartes Systems Group, Global Trade Intelligence, Industry Strategy Director – said that the precisely planned and highly-synchronized supply chain networks that made trade flows predictable in the past, require more maintenance, fine-tuning, and tweaks to maximize performance in the current operating environment.
Supply Chain Resilience Threats
Just when we thought we had turned the corner with COVID, along comes a geopolitical turbulence in the form of the Russia-Ukraine war which has thrown the agricultural, metals, energy, and other markets into turmoil. The conflict has also resulted in economic sanctions against Moscow and its allies, giving Russia the dubious distinction of being the most sanctioned country in the modern world.
Layered on top of this is the fact that we’re still dealing with the ongoing effects of COVID, which is manifesting itself in lockdowns in China, along with port congestions globally that don’t look like they are going to be resolved any time soon. And for fear of sounding like the clichéd telly ad when they say “Wait but there’s more…”, there really is more, much more, that affects supply chain resilience on our doorstep now and on the horizon. Brexit is still a work in progress. Inflation is rising. There’s talk of economic downturns. And trade conflicts are coming to the fore again.
“We’re living in an unprecedented period in our history. And the pressures we are facing are not likely to abate in the foreseeable future,” Wood said. “The single strategic point to make at this juncture is that the risk exposure of all these challenges to businesses is significant. And these businesses are trying to figure out how to deal with them, to make their supply chains more resilient to keep their growth potential on track by delivering quality products on time and maintain a satisfied customer base.”
Amy Robinson, C.H. Robinson Western Region Sales Director, and WIT-NC Vice-President, echoed that sentiment. “With more than forty vessels still queuing up outside the Port of Los Angeles, and wondering which markets might go into lockdown like China, the days of clockwork reliability of supply chains are a thing of the past. Disruption is the new norm.”
What is Supply Chain Resilience?
In its purest form, supply chain resilience is the art and science behind the smooth running of a system of processes designed to deliver goods and services to consumers, and where these systems can quickly recover from shocks such as pandemics, wars, natural disasters, and trade conflicts. But these shocks aren’t limited to en masse life-changing events. They can include textbook business challenges like new market trends, modifying or adapting consumer behavior, and unexpected competitive moves.
Organizations that can successfully minimize the negative effects of disruptive forces are in a strong position to be able to maintain their trade flows to global markets and ensure their growth trajectory remains healthy. This would also be a significant competitive edge over their rivals.
Supply Chain Resilience Cornerstone Strategy
Wood said that the key strategy to enabling effective supply chain resilience lay in having the right data to help understand the market and combining that with the right capabilities to navigate and leverage that data to support optimal business decisions.
“It might sound obvious but it requires a more holistic approach to solving the equation because the ‘data, capabilities’ process can encompass at the very least the procurement, customs, and trade compliance departments, along with finance and legal,” he said.
‘Quick Win’ Approach
The short-term or ‘quick win’ approach to optimize supply chains is to shift to less congested trade lanes. Many organizations are doing this now by using Descartes Datamyne global trade data solutions, which can help to quickly differentiate between congested ports and those marine container dockyards with capacity.
“Companies have the power to make rapid shifts in a short period of time to take advantage of under-utilized trans-shipment points to stabilize the situation and bring things under control,” Wood said.
Long-Term Strategy to Supply Chain Resilience
The strategic way to strengthening supply chain resilience involves the reconfiguration of the web of production facilities and trade lanes through supplier diversification in alternative countries and markets that organizations had not previously considered doing business with.
But going this route is more complex and requires a longer-term approach. That’s because there are three major steps that must be followed:
- Identification of Alternative Suppliers: Finding factories in alternative countries to reduce the risk of over-exposure and over-investment in a single production base;
- Analyzing the Business Viability of New Options: Using landed cost calculations to make an informed business decision before vendor selection in one country or a mix of markets;
- Vetting of New Trade Chain Partners Before Onboarding Them: Screening new suppliers against official denied parties lists to make sure organizations address international trade compliance regulations.
The prerequisite to successfully implement, run, and manage this style of supply chain resilience on an ongoing basis is the combination of the right data and the right capabilities. “If you can’t access the right information, you can’t mitigate risk. But for organizations that have the access and can use the information correctly, it’s a game changer,” explained Wood.
WIT-NC President Janice Whitaker added that “companies that are able to mitigate risk and adjust their posture to be more strategic are better set up for success. Knowledge is key to facilitating this”, stressing, “We have to strive to be the ‘Know’ organization and not the ‘No’ organization”.
How Descartes Can Help to Strengthen Your Supply Chain Resilience?
Descartes' Global Trade Intelligence solutions can help businesses reduce supply chain disruptions by tracking import and export patterns, keeping pace with trade policy changes, and managing trade compliance requirements, among others.
Organizations across all industries benefit from our solutions that help to initiate growth strategies, explore new markets, simplify trade data research, better classify goods, reduce duty spend, and minimize the risk of transacting business with denied parties.
In particular, Descartes Datamyne features the world’s largest searchable trade database covering 230 markets across five continents. Gathered directly from official filings with customs agencies and trade ministries, including bills of lading, our data is detailed (down to company names and contact details of potential suppliers), timely and authoritative.
Supply chain shocks will occur, but with Descartes’ solutions in place, businesses will be able to build more resilient supply chains and be better prepared to minimize the impact of future disruptions.
You can also visit our Global Shipping Crisis Resource Center, which is updated regularly to provide the latest trade data and insights from Descartes Datamyne.