Resilient supply chains perform better, but extra stock is of little help

Companies with a high degree of supply chain resilience demonstrably perform better than those that are less resilient. Digital maturity, insight into suppliers and the early detection of disruptions make the biggest difference. By contrast, holding higher levels of safety stock appears to be linked to poorer business performance. This is the conclusion reached by consultancy firm Efeso based on an international survey of 250 supply chain executives.

In the report ‘Supply chain resilience as competitive advantage’, Efeso demonstrates a positive correlation between the maturity of supply chain resilience and business performance. Companies with a higher resilience score generally report better results on indicators such as forecast accuracy, Days Inventory Outstanding and digital supply chain capabilities. The researchers emphasise that this is a statistical correlation and not a proven causal link. Furthermore, resilience in itself does not guarantee better performance: 74 of the 250 companies possess relatively high levels of resilience capabilities, but are unable to translate these sufficiently into better results.

Efeso divided the respondents into 109 high-performing and 141 lower-performing companies. Six measures of supply chain resilience were then compared. The biggest difference lies in digital maturity. Among the high-performing companies, 48 per cent possess advanced digital supply chain capabilities, including real-time visibility and advanced analytics. Among the lower-performing companies, this figure is just 10 per cent.

This story was originally published by Supply Chain Movement. Read the full story at Supply Chain Movement →