Supply chain resilience
Topic: Globalisation and MNCs · NCERT: Beyond NCERT
Meaning
Supply chain resilience is the ability of a supply chain to withstand a shock and recover from it. A supply chain is the full path from raw material to the final buyer. Resilience rests on three things:
- Diversification: more suppliers and more locations.
- Redundancy: buffer stocks and spare capacity kept in reserve.
- Visibility: knowing your suppliers, and your suppliers' suppliers.
There is a trade-off. Just-in-time means lean stocks and the lowest cost. Just-in-case means extra stocks, which is safer but costlier.
Example
COVID-19 (2020-21) broke many supply chains. In response, India, Japan and Australia launched the Supply Chain Resilience Initiative (SCRI) in April 2021 to spread supply sources across more countries. India's heavy dependence on China for electronic components, APIs (the active ingredients in medicines) and solar cells shows why resilience matters.
Don't confuse with
- De-risking: a policy of cutting dependence on one particular country. Supply chain resilience is the wider ability to handle any shock, from any source.