Many industries are at peak awareness of supply chain risks, particularly at the senior executive team level. As a supply chain leader, you likely believe in the need to do more to increase company resilience. 

However, at the same time, you may feel constrained by competing priorities from your finance department, and conflicted about how to measure and make the case to your C-level leaders about how trade-off decisions like shifting your supply chain network or expanding multi-source supplier options add real value. That may keep you locked into your current approach to addressing supply chain risk.

But traditional supply chain risk-management strategies are based on limited and static sources of insight, and often fail to support cross-functional collaboration. Because teams across the enterprise lack a single source of truth, every team has a different view of what are the most important risk factors to consider. There’s a lack of cross-functional alignment on what constitutes supply chain risk and how to mitigate it, and risk mitigation often remains reactive despite the lessons that we all learned during the pandemic.

Many companies, of course, are making long-term investments in supply chain planning, scenario planning, risk monitoring, and innovation in sales and operations planning overall. But many are overly focused on optimizing inventory levels and balancing supply and demand to achieve efficiencies, and they’re not focused enough on operationalizing risk mitigation. 

You may feel a little better if you’re using a supply chain risk monitoring service to track where the electronics components and other ingredients you have ordered are in the supply chain. But the initial wave of supply chain risk monitoring services is overly focused on the location of electronics components and other ingredients on which businesses rely to build products. 

It’s good to know where these things are by watching “dots on a map.” However, your ability to mitigate risk is minimal if an extreme weather event, a labor strike, or a ship stuck in the Suez Canal stops or stalls your delivery. At that point, you can order more parts or attempt to have your delivery loaded on to an alternative ship or container, but that could take weeks. While you wait for the golden screw, your production may grind to a halt, leading to missed opportunities.

Implementing China+1 sourcing strategies is another way companies are working to address supply chain risk. Jabil’s 2024 Supply Chain Resilience Survey indicates 63% of supply chain survey respondents have implemented, and 10% are developing, such diversification strategies.

China+1 strategies came in the wake of the pandemic, and exposed the heavy reliance on China to source key components and materials, the rise of new regulations that complicate business operations in China, interest in reshoring and nearshoring, and ongoing tensions between the U.S. and China. And they were a great first step. But they’re just the tip of the iceberg in terms of the deeper trade-off decisions that supply chain professionals and their businesses can make.

The limited efforts to address supply chain resilience and resulting low level of digital maturity for global manufacturing are leaving organizations unprepared for the next major disruption.

Following are three ways you can build on the risk-mitigation strategies you’re already adopting, get out of firefighting mode and become more proactive, and increase your supply chain resilience.

Build in resilience from the start. To get the full value out of your risk management investment, you need to build resilience into your operations from the very start of the new product design process. This “shift left” approach originated with software developers, who test products early to spot and fix bugs and errors before shipping software. But “shift left” is extremely valuable for supply chains, too.

Getting ahead of supply chain challenges is critical in today’s world of extreme weather events, political strikes, rising geopolitical tensions and other risks — especially considering that 80% of a typical hardware product’s risk, cost and sustainability is locked in at the point of design.

By designing in resilience through new forms of intelligence to understand risk, then identifying alternative suppliers and parts upfront, you can provide buffers to help absorb system shocks, both from events that occur very quickly and those that unfold over time. 

Expand your scope of influence. There’sample opportunity for supply chain and other professionals involved with new product introduction to expand their scope of influence both within and outside of their enterprises. 

Internally, that includes helping drive the conversation about how your company evaluates and consistently measures the health of new products in the pipeline, by analyzing supplier and financial health, regulatory compliance, trade considerations and flexibility to adapt to new markets and geographies. These conversations should include engineering, finance, procurement and supply chain teams, each of which should have access to the same internal and current external market intelligence.

Collaborating with key suppliers can also enable you to mitigate risk and improve resilience. That may include understanding where the supplier is building new factories and aligning on a China+1 strategy, drawing on the market intelligence that suppliers have to get a broader market view, or forging direct long-term agreements with suppliers, as some major automotive OEMs have done.

Engage with your suppliers in new ways. There’s enormous additional opportunity for innovation in working with your key suppliers.

For example, you could ask if there are parts similar to the ones you’re trying to buy that have a lower risk score, and might enable you to better buffer your risk. These insights can help you to understand which components are at low risk from a continuity of supply perspective, and not exposed to potential market competition for high volume end markets such as artificial intelligence data centers or consumer electronics and, as a result, may be costly or hard to compete for in the future.

Suppliers and distributors that have broad global market insights can share such insights and potentially help you mitigate supply chain risk. But such conversations only happen if you move beyond transactional relationships and have strategic alignment detailing your goals and objectives, and identifying opportunities for additional value creation.  

Achieving peak awareness of supply chains and their related risks has been beneficial. But awareness will only translate into increased resilience if companies take the right next steps.

Leaders across industries are now catching their breath after the pandemic. Despite the tremendous lessons learned during that time, businesses have yet to fully think through the root causes and address how to ensure we’re never back in the position we faced at the start of the pandemic.

Now is the time to go beyond risk monitoring and delve deeper to simulate and measure the opportunity to avoid risk, operationalize decision-making across functions, and build business resilience by reducing your products’ and company’s exposure to supply chain risk.

Richard Barnett is chief marketing officer at Supplyframe.