Supply Chain Resiliency A Must for Success

Opportunities to increase market share will increase when companies are pre-positioned for growth in a resilient and scalable way.

Supply Chain Resiliency A Must for Success

By Lisa Anderson, Founder and President, LMA Consulting Group

Risks abound in the global supply chain and goods movement systems. The only successful strategy to thrive is to create a resilient supply chain. According to the Global Port Tracker (GPT) report from Hackett Associates and the National Retail Federation (NRF), the specter of labor strife and new tariffs, along with strong sales, is driving U.S. retailers to keep imports surging through the spring. With that said, based on the polling of NRF members, the rest of the year might be weaker than last year. Due to the disruptions, volatility, and risks, the only safe route to support customers and maintain a reasonable profit will be to create a resilient supply chain.

Red Sea Remains Problematic

The Red Sea and the Suez Canal remain a mess due to the Iran-backed Houthi rebels attacking ships in the Suez Canal. In fact, according to FreightWaves, the Suez Canal revenue plunged 60% in 2024, which created an over $7 billion dollar loss for Egypt. This situation is not forecasted to return to normal levels until the second half of 2025. Thus, logistics leaders must plan accordingly and ensure backup options exist for changing conditions.

Port Capacity Complications

If the NRF forecasts come to fruition, December's imports will break the all-time pandemic record of 19 straight months of more than 2 million TEUs. Thus, the expansion of capacity becomes noteworthy although profitability must also remain intact. According to maritime intelligence provider eeSea, the container lines are deploying a record level of capacity. However, it is less certain that the ports' capacities will keep up with the demand. For example, strikes and lack of automation reduce capacity. When demand and supply are misaligned, customers suffer, prices rise, and profitability declines.

Reshoring & Friendshoring on the Rise

Because of the heightened geopolitical and supply chain risk in addition to the potential of tariffs and tax incentives, executives are reevaluating options to reshore, expand manufacturing capabilities, friendshore, and vertically integrate. In essence, they want to regain control over their customer performance, cost structure, and success. Because of these changes, supply chains are on the move, which directly impacts transportation and goods movement services.

Creating a Resilient Supply Chain

As supply chains are re-routed due to disruptions such as the Houthi rebels in the Suez Canal, diverted due to potential capacity constraints, and on the move due to the evolution of regional manufacturing, creating a resilient supply chain is of paramount importance. The only thing that will stay the same is change. Thus, supply chains will constantly evolve, and companies with resilient supply chain capabilities will succeed while the others struggle. For example, if China shuts down a critical route such as the Panama Canal or South China Seas, only companies with a plan B and plan C for goods movement will survive.

Establishing backup sources of supply is not enough. Companies that want to thrive will pursue advanced strategies such as developing strategic partnerships and alliances with end-to-end supply chain partners to ensure access to commodities, rare earths, the appropriate manufacturing capabilities, and talent and technologies to ensure customer success. Since keeping demand and supply alignment is key to ensuring customer satisfaction and profitable growth, prioritizing a SIOP (Sales Inventory Operations Planning) process must also be at the top of your list. SIOP is a forward-looking process that highlights key decisions, bottlenecks, and strategies to stay ahead of changing conditions in your global supply chain.

The Bottom Line

Disruptions and risks will continue to be widespread. Thus, successful companies will create a resilient supply chain to successfully navigate these rough waters. They will not be surprised by changing conditions, slow to react, and unwilling to invest in success; instead, they will prepare in advance, predict likely scenarios, and design flexibility into their processes. The most successful companies in the next decade will be those that rapidly pivot with changing conditions and are willing to prepare and invest for what is coming down the pike to take advantage of opportunities before their competition.