It’s time to rethink supply chains: how they work, how they impact your business decisions, even what they are.

Supply chains have long been in a process of complete transformation. As various uncertainties are expected to come, go, and continue for the foreseeable future – rising costs, tariffs, labor shortages, geopolitical and legislative changes – successful businesses are accepting this new reality of constant evolution that is redefining how businesses procure materials, people, and capital. 

Savvy leaders aren’t waiting for things to settle; they’re building resilience into operational models so that they are ready to adapt to changes and build new value throughout the supply chain.

Consider the following as you put together a long-term plan for operating in today’s reality.

How to build resilience into your supply chain

1. Reconsider preconceived notions about what supply chain is and is not. It is no longer (if it ever was) about pure commodities – what do I need and how much does it cost? Today, it’s a concept that cuts across everything in your business, from strategy and operations to finance and talent.
2. Collaborate to mitigate the impact of continued disruption. Success in today’s environment depends on your ability to think of your vendors and suppliers as collaborators. Businesses at every step along the supply chain (investors, owners, suppliers) need to work together to address issues of availability, timing, and cost. For example, ask suppliers, “Where else do you have factories? Where else can these materials be delivered? What can we do to help facilitate this process?”
3. Consider alternate inputs. If standard inputs are in short supply, how can you pivot to alternative sources to shorten the supply chain of necessary inputs? Think creatively about what materials are readily available in your local or regional community, and how they could be used to replace more traditional inputs.
4. Stock up to lock in prices. Some businesses may aim to keep overhead costs low by breaking projects into smaller pieces and sourcing materials on a just-in-time basis. But given today’s supply chain challenges, those with the resources to do so should consider “batching” the materials needed for the entire project and buying in bulk wherever possible. When one material drops in price or becomes readily available, move quickly to lock in prices. 
5. Build elasticity into project plans and financial models. Agile strategies are more critical than ever as we continue to confront many unknowns. Materials shortages, labor shortages, and supply chain disruptions will continue to cause delays, which must be factored into project timelines and communicated clearly to clients and consumers to manage their expectations. Materials costs also will likely continue to rise as we continue to experience rising inflation, evolving tariffs, and an imbalance between supply and demand. Project stakeholders need to not only build those costs into new contracts, but also work with other stakeholders to accommodate escalating costs on projects that are already in the works. If your firm lacks expertise in financial planning, analysis, and modeling, seek out third-party providers and technology to help you build resilience and elasticity into your plans.
6. Pay attention to your consumers. The most successful players are firmly plugged into today’s reality, with an uncanny ability to see around the corner at what’s coming. You may not be able to predict every bump in the road, but by focusing on where your offerings fit into the grand scheme, you can maintain a sense of what will remain relevant as trends come and go.
7. Take control of procurement. Businesses with the resources to do so are creating dedicated procurement teams solely focused on sourcing materials. Even if you don’t have the resources to create a dedicated in-house procurement team, developing strong relationships with local suppliers and staying on top of the latest trends in materials cost and availability can help you make sure you have what you need.
8. Be prepared to act quickly when demand shifts. While supply chain delays are undoubtedly making things more difficult, there are positives as well. For example, for the real estate industry, the rise in demand for products following the COVID-19 pandemic has also created a boom for the industrial industry and caused warehouse space to become much more profitable. In particular, there is a rise in demand for spaces and properties near seaports, inland ports, and air hubs. Change can often spell opportunity for firms that move fast and know where to look.

When confronted with continued challenges, the best path forward is the one that brings stakeholders together and inspires looking beyond what is in front of you to see the opportunity within the chaos.

Reach out to start strengthening your supply chain for whatever the future holds.