While the traditional supply chain does exist — a chain of suppliers, distributors and customers all linked together linearly — the reality is that most supply chains are multi-tier. For the uninitiated, this means they are multiple single-level collaborations linked or stacked within a seamless chain.
There are many benefits to building a multi-tier supply chain, such as reduced costs, a reduction in capital expenditures, faster product delivery and higher-quality services. Unfortunately, it also significantly increases the complexity of operations and can severely damper visibility in many cases. Moreover, SMBs managing and sifting through digital data related to even just a single-layer supply chain can run into difficulties, with or without the proper resources.
There’s never been a convenient or coherent solution for managing multi-tier chains or the data of conventional chains — at least until now. The industry is starting to emphasize the power of up-to-date and on-demand precision metrics. Queue the rise of real-time, multi-tier and multi-factor risk management tools, like that of Interos’ recent launch.
Understanding the risk
The more cooks you have in the kitchen, the more mistakes and the greater the risk to the meal. One cook may recognize a missing ingredient and make their own concessions. Another might add something that’s not supposed to be there. With a bevy of so-called culinary experts adding spices, ingredients and garnishes to a dish, some things just aren’t going to jive. The result is a meal that might look great but tastes bad due to unforeseen changes, or vice versa.
This example describes the modern multi-tier supply chain almost perfectly. When the market is doing excellent, there may not be as many setbacks, if they happen at all. Those cooks, so to speak, might cobble together a fantastic dish. Unfortunately, today’s market is incredibly volatile because of Covid-19, political turmoil and various world events. This means organizations are constantly forced to re-evaluate complex supply chain configurations, whether that means building new relationships or sourcing entirely new components and supplies.
To make matters worse, an overwhelming number of organizations cannot even properly manage their primary suppliers at the surface level. If and when shortages or events affect the pipeline, those at the top don’t find out until it’s too late. Therefore, the risks increase exponentially as a multi-tier chain grows more complex and varied.
What Is a multi-factor approach?
Something must be done to boost visibility and reaction times across the supply chain, and that’s true whether it involves a single- or multi-tier system. While it’s not the only cause, the Covid-19 pandemic has certainly put the spotlight on how the modern supply chain operates. Companies that could overlook supplier risk in the past can no longer do so, and their supply chain needs to be appropriately managed.
The solution is what is known as a multi-factor approach, which leverages digital technologies to improve visibility and build resiliency within the supply chain. In other words, it empowers companies by delivering real-time information about the entire supply chain, simple or complex.
That’s not all. Some other elements of a multi-factor approach include:
- Amassing an inventory of finished goods, raw materials and backup suppliers to mitigate future shortages.
- Simplifying development and manufacturing processes to reduce the impact of events.
- Localizing or relocating manufacturing and supply points, away from geographic stressors.
- Researching and developing backup strategies for service or product delivery, such as using pickup logistics or expedited shipping alternatives.
Interos’ system is a prime example of a sophisticated and reliable multi-factor risk management platform. It affords a top-level view using a series of innovative technologies, like artificial intelligence (AI) and machine learning. Most importantly, it does more than just tell companies when something is wrong. It provides them with alternative solutions, such as a database of suppliers and risk profile ratings.
Beyond securing a more successful and battle-hardened supply chain, this technology can also vastly improve existing operations. Multi-factor systems can enable speedy analysis, a necessary component of reducing supply chain risks and costs. Thanks to the increase in visibility, these systems can help negotiate and manage more cost-effective opportunities, like finding a better transportation provider. They can also help pinpoint more budget-friendly sourcing solutions for raw materials, even showing up-to-date ratings for various countries and providers.
Multi-factor digital solutions will become one of the most powerful tools in a company’s arsenal.
Building an escape tunnel
The Covid-19 pandemic has made it painfully obvious that bad things happen, and the supply chain can be devastated. As an industry, we’ve always known there was no getting around it. But while there have been ripples throughout the years, there has never been anything like this.
Companies that wish to build forward momentum, regardless of how volatile the market is, must have a veritable escape tunnel. There must be a lineup of backup suppliers, solutions and opportunities they can leverage instantly in the event of a failure. Building a multi-factor information system using real-time and digital technologies is the answer.
It empowers a company’s management strategy by delivering real-time notifications, discovering alternative means and providing the necessary tools to act.