Managing logistics operations is particularly challenging during disruption. Semiconductor shortages, geopolitical instability and pandemic-related bottlenecks have demonstrated how fragile the global electronics supply chain can be. It’s important now, more than ever, that resilience is central to logistics planning for electronics manufacturing.
Logistics managers are on the front line when disruption occurs, whether that comes in the form of container backlog, supplier delay, or export control. Logistics operations are arguably among the first to feel pressure.
Managing logistics operations doesn’t just involve the moving of goods, but also performing risk management, planning, and incorporating early warning systems. Resilience relates to the capacity of a supply chain to persist, adapt, or transform during disruption. It differs from risk management in that risk management is reactive, while resilience puts organisations in a better position to respond to disruption as and when it comes.
The Association for Supply Chain Management (ASCM) defined resilience in the supply chain as “the ability to return to a position of equilibrium after experiencing an event that causes operational results to deviate from expectations”. In other words, the sooner an organisation can cover, the more it indicates their particular resilience.
Because semiconductors are a foundational technology in modern society, with a complex network spanning design, development, fabrication, assembly, testing, packaging, and distribution it is considered a type of critical infrastructure that must be safeguarded.
Its importance can be illustrated through examining one of the examples of the impact of disruption: from 2021-2022, US car manufacturer Ford experienced a production loss of 1.3 million cars due to chip supply constraints. And at the height of the global chip shortage, worldwide auto production slumped 26% during the first nine months of 2021 (according to research from J P Morgan).
A key lesson taken from the pandemic is that a lack of diversification is a serious risk. If an organisation relies on only one or two suppliers, it may not be able to weather any incoming storms, or it may seriously struggle.
There are known ways of measuring how resilient a supply chain is – time to survive, meaning the amount of time a supply chain can continue functioning after disruption; time to recover, how quickly the supply chain will rebound; and, finally, time to thrive, how quickly it can implement changes after disruption.
Strategies for baking in resilience include diversifying manufacturing bases, investing in domestic production capabilities – something the US has turned its focus to with the introduction of tariffs and protectionist policies – promoting international collaboration and partnerships, and utilising technologies like AI.
Other strategies which would improve resilience include scenario planning and risk modelling – running ‘what-if’ scenarios to understand how the organisation would be affected and could respond – and incorporate geopolitical risk assessments due to the importance of policy on trading.
Implementing these strategies will result in greater visibility, flexibility, and control. Organisations with supply chain resilience enjoy greater productivity, efficiency, and risk reduction.
Supply chain resilience is ultimately essential, not optional. Electronics manufacturers stand to gain a competitive advance and long-term operational stability through investing in their own visibility, flexibility, and preparedness.
