Alternate Supply Chain Network... Could This Be a Strange, Surreal Approach?
The Coronavirus pandemic has brought about an unparalleled disruption in businesses worldwide and their supply chains. This has sparked the discussion of parallel supply chains, a duplication of the current supply chain system. Although this approach may seem beneficial, questions remain about its long-term feasibility and whether it's worth the investment.
A parallel supply chain, in essence, is an exact replica of the existing supply chain network. From the sources of raw materials to distribution channels, everything is mirrored. In theory, both supply chains can coexist, with the majority of the business flowing through the mainstream supply chain. In emergencies, the allocation of supplies can be increased to either chain as necessary.
The idea behind parallel supply chains is to reduce future supply disruptions and boost resilience. However, the question remains: is this truly a viable long-term strategy or a journey into uncharted territory?
Parallel Supply Chain Advantages
A parallel supply chain offers a level of established redundancy, reducing the risk of supply chain interruptions. Additionally, by utilizing a smaller portion of the business on the parallel supply chain, its capacity can be quickly expanded during emergencies.
This duplicated system can potentially push competitors to maintain competitive terms, service, and pricing due to the knowledge that another competitor could perform the same work. Furthermore, advanced investments in equipment, tools, technology, and resources provide latent capacity that can be activated on demand.
Patriotism and the desire for increased domestic sourcing have led some to view parallel supply chains as a solution for dependency on foreign countries. Moreover, government leaders, board members, and executives are increasingly pressing supply chain teams to deploy such mitigation strategies.
Parallel Supply Chain Disadvantages and Twilight Zone Implications
Managing and maintaining a parallel supply chain requires vast resources. Finding, qualifying, negotiating, and tracking suppliers and service providers is a full-time job for any organization. This includes supply and demand planning, inventory management, quality management, logistics management, channel management, manufacturing, and distribution.
Duplicating an entire supply chain can be expensive, especially considering the cost of identifying, developing, and diversifying access to intellectual property. Additionally, bringing work back into one's home country does not necessarily guarantee protection from future disruptions, as the reach of pandemics is broad and indiscriminate.
The oversimplification that domestic parallel supply chains will be faster and more responsive disregards the fact that these chains are still vulnerable during disasters. However, the cost of running a duplicate supply chain is a significant concern, as leaders may not be eager to provide financing for such an undertaking.
What Next?
While a parallel supply chain strategy has its appeal, it may not be the optimal solution. A dual sourcing strategy that involves having alternatives for all goods and services is advisable. Also, outsourcing services beyond manufacturing, distribution, and logistics can help protect organizations in the event of disastrous events.
Strategic inventory management, particularly the maintenance of a strategic stockpile, should also be prioritized. By keeping key materials and products on hand, organizations can navigate many situations more effectively.
Although duplicating the entire supply chain may not be necessary, having certain aspects of a parallel supply chain in place can better prepare businesses for future disruptions. However, this requires careful consideration of costs, resources, and alternatives to ensure long-term sustainability and effectiveness.
References:[1] Our website. (July 28, 2020). Driving Supply Chain Success Through Technological Innovation! [online] Available at: https://our website/technological-innovation-driving-supply-chain-success/[2] Our website. (July 28, 2020). Innovating Supply Chain Management: Strategies for Future Growth! [online] Available at: https://our website/strategies-for-future-growth/[3] Our website. (July 28, 2020). Introduction to Supply Chain Data Analytics! [online] Available at: https://our website/supply-chain-data-analytics-analytics-enhances-data-driven-decision-making/
- The Coronavirus pandemic has brought about a need for discussions around supply chain resilience, exploring strategies like duplicating supply chains to prevent future disruptions.
- A parallel supply chain, an exact replica, mirrors the existing network, ranging from raw materials sources to distribution channels, with both chains potentially coexisting.
- Advantages of parallel supply chains include reduced risk of interruptions, quick expansion during emergencies, and potentially competitive terms due to duplication.
- However, maintaining a parallel supply chain requires significant resources, including investments in equipment, tools, technology, and human resources for tasks like supply and demand planning, inventory management, and logistics management.
- The long-term viability of a parallel supply chain strategy is questionable due to its high cost and the fact that it may not completely protect businesses from future pandemics or disruptions, emphasizing the need for careful consideration and the exploration of alternative strategies like dual sourcing and strategic inventory management.
