Improving productivity at the expense of increased vulnerabilities within the supply chain remains a major cause of risk as does the growing complexities behind some large supply chains.
Identifying vulnerabilities allows companies to be crisis-prepared for disruptions in any form, be-it corporate strike, counterfeit product, or other sources. Focusing on improving quality, increasing flexibility, and maintaining productivity are essential when identifying potential risks.
Resiliency and flexibility are interconnected and positive qualities to aim for in any supply chain and inventory management strategy. Resilience is the ability to react positively and bounce back after a negative occurrence – an obvious statement, yet the strategy resides in having the ability to react, not knowing to do it.
Following are two tactics that must be included in any supply chain and inventory management strategy:
Manage the inventory pendulum. – Fluctuations in product availability leads to pricing volatility. Together, these twin peaks of pricing and inventory volatility wreak havoc on budgets and production schedules.
Reduce internal supply volatility. – Limited to no volatility internally prevents available inventory to be utilized to meet demand, and allows additional, unnecessary costs to be realized in attempting to acquire product already available. Similarly, inventory purchased for and dedicated to a program that has subsequently been put on indefinite hold will create a Hobbsian choice of whether and when to excess that inventory.
With old and new problems facing the defense industry on a yearly basis, having a strategy that’s designed to be resilient despite these problems is key for prolonged and future success.