Building unshaken supply chains: A blueprint for economic resilience

In April, the United States announced a slew of reciprocal tariffs on almost all its trading partners. President Trump’s new trade policy aims to use these tariffs to help “rebuild the economy and restore national and economic security.” Yet, imposing tariffs will have long-ranging effects on international trade, supply chains, and global economics and may even incite a global tariff war. For example, powerful trade partners such as China, Canada, and the EU are already taking retaliatory measures.

These actions will force companies to further fragment already splintered supply chains, increasing national inflationary pressures, straining geopolitical relationships, and leading to slower economic growth. Disruptions from international conflicts, world policies, government actions, and natural disasters introduce significant supply chain performance challenges. As a result, it is vital for businesses to rethink supply chain resilience to help guard against disruptions caused by geopolitical conflicts, political tensions, and other economic upheavals.

How disruptions impact the global supply chain

Time, quantity, quality, and cost are the four founding deliverables of every supply chain. Every supply chain manager knows the risks of navigating this fragmented, unstructured, and complex network in the face of global challenges. FTI Consulting states, “Supply chain disruptions lead to shortages of key goods, price inflation, factory closures, unloaded shipping containers, and adverse effects on a nation’s economic well-being.”

There are three significant reasons why supply chains are fragmented, unstructured, and complex: supply chain spectrum, supply chain cohesion, and supply chain gradient. The three strands of supply chain management are inextricably linked and form the “triple helix supply chain DNA,” a methodology that helps companies understand and prepare for disruptions (Figure 1). Here is how it works:

• Spectrum (structured versus unstructured). The supply chain is fragmented because every industry, company, and product line evolves differently.
• Cohesion (fragmented versus unfragmented). There are no industry standards, and every company uses its own acronyms and formats, which leads to unstructured data.
• Gradient (complex versus simple). Complexity in global supply chains comes from the many relationships and power dynamics.

Figure 1

Figure 1. Triple helix supply chain DNA. (Photo: Abhijit H. Supekar)

Economic crisis and the fragmented supply chain

The supply chain is largely unseen to the average consumer. Still, in recent years, pandemics, wars, and trade policy changes have highlighted the core weaknesses in “the triple helix supply chain DNA.” For example, in March 2022, the clothing industry was greatly impacted when major textile exporter Sri Lanka defaulted on $55 billion in foreign debts. According to the Centre for Business and Development Studies, this economic crisis made it difficult for the government to provide its citizens with everyday essentials like food, fuel, electricity, gas, and prescription drugs. Textiles account for over 45% of the country’s export earnings, so many were concerned about how the economic crisis would affect clothing manufacturers’ ability to keep electricity and purchase raw materials.

The crisis in Sri Lanka is an example of how political and economic turmoil can lead to a decreased availability of raw materials for manufacturing, factory disputes, port closures, and transportation delays. These factors caused a ripple effect that altered supply chain efficiency and increased the overall cost for organizations and consumers. Because clothing companies relied so heavily on this region for textiles, they had to find ways to help mitigate fractures in the supply chain. Ultimately, the economic uncertainty led brands to relocate production to other countries, and the government moved to ensure that garment factories had a steady electricity supply. Sri Lanka, however, was able to bounce back economically, and by December 2022, Sri Lanka reported $5.6 billion in revenue from apparel exports, a 10% increase from 2021. As a result, the industry has shown not only resilience but significant growth.

Fundamentals for an “unshaken supply chain”

Because supply chains are traditionally fragmented, unstructured, and complex, building a resilient one is even more critical to business growth. An “unshaken supply chain” is built on strong networks that ensure supply continuity and help guard against unforeseen economic and political problems (Figure 2).

What does a resilient supply chain look like? It can withstand shocks resulting from various geopolitical risks and climate disruptions. It provides end-to-end visibility, which facilitates faster reaction times. It improves agility and adaptability without crippling cost impact. It inherently offers built-in redundancy.

To create an unshaken supply chain, follow these steps:

1. Establish foundations for a resilient supply chain (Figure 2). Start by creating end-to-end transparency throughout the supply chain. Ensure complete visibility and traceability of a product or service's journey, from raw materials to the final consumer. Develop comprehensive supply chain mapping and risk assessment procedures by understanding every point of the product’s journey. Then, move to simplify supply chain architecture with strategic sourcing policies and processes.

Figure 2

 

Figure 2: Fundamentals of an unshaken supply chain. (Photo: Abhijit H. Supekar)

2.   Hire and develop a supply chain organization. A strong supply chain relies on the people who form it. It’s more than just hiring great people. Invest in skill development and leadership training to equip employees with the latest tools and knowledge. A company culture that fosters continuous learning and adaptability will be better prepared to face future challenges because it rewards innovation and strategic problem-solving.

3.   Invest in supply chain tools for accuracy, efficiency, and intelligent decision-making. Companies can leverage internal or external experts to help set up automation (such as scanners, purchase order placements, and shipment tracking) to improve simplicity and efficiency in everyday operations (Figure 3). Implement advanced digital tools, such as artificial intelligence (AI) and generative AI, predictive analytics, and global connectivity, that are real-time, automated, insightful, provide a single source of truth, and leverage team knowledge to prioritize actions that align with business goals. For example, a company can use AI-driven insights to detect patterns in demand forecasting and inventory optimization. AI tools also allow companies to monitor geopolitical conflicts, supplier dependencies, and regulatory compliance and prepare for potential disruptions.

Figure 3

Figure 3: AI data systems to optimize supply chains. (Photo: Abhijit H. Supekar)

Because the entire supply chain sector is ripe for disruption, companies can build a “supply chain digital twin,” a supply chain map built with sensors and devices to ensure accuracy. A supply chain digital twin provides real-time, automated, and insightful data for organizations to prioritize actions that align with business goals and deliver visibility, availability, and flexibility for their supply chain.

Unshaken supply chains are the future

An unshaken supply chain is built with transparent, simplified supply chains managed by a strong team built on trust and powered by innovative, smart tools. With the right technology, tools, architecture, and, most importantly, people, any company can create a helpful framework for navigating unforeseen conflicts, political upheavals, and other massively impactful events. Businesses can create a future-proof supply chain capable of withstanding any challenge by focusing on risk management, strategic partnerships, process simplification, and data-driven decision-making. Building unshaken supply chains helps companies prepare for the unpredictable realities of impending trade wars, conflicts, and other disruptions. Ultimately, a strong supply chain is essential for companies to withstand whatever challenges may come their way.

About the Author

Abhijit H. Supekar

Abhijit H. Supekar is the head of global supply chain at Aeva Technologies, where he drives resilience, AI digitization, and strategic partnerships. He is a global supply chain leader with more than 20 years of experience in the health-tech, automotive, and industrial sectors. Abhijit holds a master’s degree in mechanical engineering from the University of Texas at Arlington and an MBA from the University of Michigan’s Ross School of Business. Connect with Abhijit on LinkedIn.

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