Build resilient supply chains that can withstand it

The Covid-19 epidemic of 2020 brought the world to a halt, with supply chains from large economies to small businesses suffering huge shocks. This gives people a deeper sense of supply chain security. Supply chain management reform has triggered discussions from all walks of life, in which a consensus on building a resilient supply chain has gradually emerged.

"Supply chain is an important foundation and foundation for the survival of enterprises. Although the global economy has been affected by the outbreak, the broad trend of its development remains unchanged. This means that with the advancement of globalization and the increasingly close division of labor among enterprises, the construction of supply chain has become the focus of every enterprise, especially foreign trade enterprises." Management consulting co., LTD., director of tianjin xinhua with force ChangSunWeiJun said, business development trend of enterprise mainly is the enterprise ecology, business intelligence, staff and guests, customers, community, including enterprise ecology will have important effect on supply chain management of change, "your present, an enterprise want to is very difficult. The development of an enterprise depends on the whole ecosystem of upstream and downstream suppliers, franchisees and customers. Only when the ecosystem is well established can the enterprise develop well."

In Sun Weijun's view, the external environment is constantly changing. If an enterprise can still achieve the nine words of "turning, producing and delivering", it can "withstand the crisis" and its supply chain will be resilient.

Moving refers to the formation of a rich and perfect layout between enterprises and upstream suppliers to ensure that "the east is not bright and the west is bright", so as to ensure that enterprises can still maintain operation when problems occur in some local areas.

Production, is to point to the layout of the enterprise itself needs to be more reasonable. For example, Sun Weijun says, "Some large enterprises distribute production sites in many places around the world. "To some extent, the more concentrated the production, the lower the cost, but given the security of the supply chain, the proximity to the market and the source of the raw materials is the basis for the layout, because that is the only way to keep the production more stable."

Delivered means that enterprises need to deliver the products to customers in a timely manner. In the past, the enterprise supply chain is still a chain, but now we need to build a network structure of the supply chain, in order to ensure that in the face of emergency, products still have a variety of solutions to customers.

"Don't take eggs from one basket, don't scramble them in one place, and don't give them away through one channel." Sun Weijun summed up the characteristics of resilient supply chain with this sentence. He believes that enterprises need to improve the resilience of supply chain from the concept of two levels, action.

Do not seek the overall situation, not enough to seek a domain; He who does not seek eternity is not enough to seek time. Sun Weijun believes that enterprises must view the construction of resilient supply chain from an overall and long-term perspective.

"Some companies may use centralized sourcing to reduce short-term costs, but from a supply chain resilience perspective, this is not good because the more upstream suppliers you have, the more resilient your supply chain is. In the context of increasing uncertainty and instability in the current external environment, enterprises must have a sense of crisis and always think about what to do after the crisis." Thus, Sun Weijun thought of an exchange he had with Ren Zhengfei, the president of Huawei in 2016. Ren Zhengfei's words left a deep impression on him -- "An enterprise, no matter how big its scale is or how high its market share is, will always be overthrown if it has no core competitiveness" and "It takes ten thousand years to make chips".

"The same is true for supply chain management. Enterprises need to take a long-term view, grasp the key nodes, in the non-key nodes, there will be a few more places to choose eggs, a few more places to scramble eggs, more people selling eggs on commission." Sun Weijun said.

At the operational level, companies need to be prepared. Sun Weijun believes that the uncertainty and instability faced by enterprises in the future may become a normal situation, so it is necessary to evaluate supply chain risks regularly. Then, on the basis of the assessment, the enterprise needs to define different risk scenarios and test the supply chain resilience in extreme situations. Next, enterprises need to identify the gap between themselves and excellent enterprises, and according to the experience and practices of excellent enterprises, take some measures in advance to build a firm risk dam.

It is worth mentioning that the enterprise ecology to establish a concept is - necessary redundancy.

"In the short term, it could be a waste. Usually, enterprises believe that inventory is the root of all evil, which leads some enterprises to rely too much on the upstream enterprises of the supply chain and transfer part of the inventory cost that they could have borne or shared with suppliers to the suppliers, which leads to the shortage of inventory during the epidemic. Therefore, in view of the weak anti-risk capability of suppliers, it is urgent for all parties to establish some industrial alliances based on supply chain, so as to establish a linkage mechanism between the main production enterprises and the upstream and downstream enterprises. In this way, companies can share risks and benefits." Sun Weijun said, the enterprise supply chain management can refer to the Dujiangyan philosophy of water control - "deep wash the beach, low weir", this can both take into account the downstream, but also to protect their own.

"Enterprises must take building supply chain resilience as the top priority in their production and operation, and make emergency plans in advance after finding the gap with excellent enterprises." Sun says that at the management level, there is a formula for companies to look at: Emotional Change + Behavioral Change = Performance Change.