Solving the supply chain resiliency equation

A recent survey by Gartner revealed that 73 percent of Chief Supply Chain Officers (CSCOs) have made supply chain changes in the last two years, with the biggest drivers being the need for increased resiliency and improved agility and flexibility. However, these changes present significant growing pains, as 96 percent also reported challenges with operating in new regions.

Supply chain resiliency is an imperative as companies face increasing uncertainty and disruption–but what variables are crucial to the equation? Applying two levers can enable companies to achieve greater supply chain resiliency: visibility and flexibility. Visibility gives companies a deeper understanding of what is happening in their extended supply chains, while flexibility and agility enables them to respond to events in real-time. Together, these two levers empower companies to quickly navigate unexpected disruptions in the near-term, while also anticipating and mitigating long-term impacts to their supply chains. This protects business continuity while improving the customer experience.

Intelligent visibility for greater insights

A report from Accenture states that “if there’s one key lesson businesses have learned over the past few years, it is that supply chains need to be much more resilient,” before going on to identify intelligent visibility as a key to resiliency.

Indeed, companies seeking to improve their supply chain performance need to first understand what is happening. In a world where challenges are becoming more severe and ongoing—whether from geopolitical turmoil, tariffs, component shortages, or weather events—it is crucial that companies constantly monitor their supply chains to identify emergent risks and identify opportunities for improvement. The volume of data to digest is staggering, which is why advanced digital supply chain tools are the key to achieving true visibility. These tools can help companies rigorously evaluate, manage, and make informed decisions about their supply chains.

At Flex, we invest in technological innovation, modeling capabilities, and real-time visibility to help our customers anticipate and resolve supply chain issues before they impact their business.

We also prioritize sub-tier visibility and have implemented tools to address this critical need, as disruptions of all kinds can happen deep within a supply chain network.

Our proprietary advanced digital supply chain tools include:

Improving supply chain visibility with artificial intelligence (AI) and machine learning (ML)

At Flex, we help a diverse array of customers proactively assess risk early in their product lifecycle, giving them visibility into potential issues before production begins. To deliver early visibility and insights, we developed a proprietary analytics application, Flex Pulse^® Risk Management, that employs artificial intelligence (AI) and machine learning (ML).

The automated Risk Management report provides part level insights for a product’s bill of materials (BOM) across various risk factors. For example, from November 2022 to November 2023, we had Risk Management analyze 1,200 new products. Each BOM contained an average of 250 components. With improved visibility, Risk Management was able to identify opportunities for overall product risk reduction by 16 percent.

Risk Management report example

Assessing and mitigating supply chain risk in the automotive industry

Flex Pulse Risk Management has been critical in helping customers assess industry-specific risks by comparing risk profiles for similar products across multiple end markets. By analyzing supply chain trends of complex compute units for both automotive and data centers, Risk Management helped uncover that the automotive industry is:

• 25 percent more likely to experience out-of-stock components
• 15 percent more likely to see future component shortages
• 10 percent more likely to experience long lead times

Flex Pulse Risk Management tool outcomes for ~2,500 products in Quote stages

from last two years (all business units)

With this information, we were able to use our experience with data center supply chains to identify potential risk mitigation strategies—including regionalization, multi-sourcing, industry-wide collaboration, and supply chain digitization—that would help our automotive customers reduce overall risk and bolster supply chain resiliency for their complex computing products.

Agility to respond quickly to changing market dynamics

Beyond visibility, the second variable in the supply chain resiliency equation is having structural agility and flexibility. This enables companies to respond quickly and mitigate the impacts of emergent risks, as well as track and improve time to recovery (TTR), which measures how long it takes a supply chain to return to normal after a disruption. A recent McKinsey & Company report on the geopolitics and geometry of global trade stated that in addition to monitoring changes in the geometry of trade, companies “can also be proactive in attempts to accelerate growth, optimize business operations, and build capabilities and strategies to help them respond to geopolitical disruption.”

This requires a combination of planning and scenario modeling tools—enabling smarter real-time decision-making—and a flexible global footprint that helps companies shift and reconfigure their supply chains.

Flex Pulse^® Network Design

To that end, we have developed Flex Pulse^® Network Design, a unique and powerful supply chain network design platform that derisks decisions and enables companies to design, test, and rapidly evaluate robust and efficient value chain solutions.

Global companies across industries have successfully applied Network Design and seen benefits including:

• 5 to 30 percent total supply chain cost reductions
• 15 to 50 percent improvements in service levels, leading to increased sales
• 30 to 70 percent reduction in inventory

We also leverage one of the world’s largest and most diversified supply chains, operating at scale across multiple industries to help our customers achieve agility and true resilience. Our network is powered by 7,000+ supply chain professionals with deep domain expertise, who operate across our sites in approximately 30 countries, and we utilize strong relationships with a trusted network of 16,000 suppliers to source more than one million parts.

Optimizing supply chain design to achieve operational efficiency

A Forbes 50 Best Mid-Cap Company with centralized manufacturing in Asia for highly complex product and assembly processes needed to reduce excess inventory at U.S. hubs while also mitigating tariffs and outbound costs.

We ran a Network Design analysis for the customer to develop a three-step plan over a two-year period that included a second manufacturing site for the non-U.S. market, vertically integrated manufacturing for parts, and a centralized in-region hub for inventory and storage.

The customer was able to reduce total cost of ownership by seven percent in step one and 11.5 percent in step two. They were also able to speed time-to-market, reducing supply chain lead time by an average of three weeks. The solution also contributed to the customer’s sustainability goals, enabling a 30 percent reduction in emissions. Finally, the customer increased inventory turnovers from two to five.

Being able to tap into a global footprint makes it easier to adapt to changing regional, trade, and manufacturing dynamics. For example, as we closely monitor dynamics around tariffs and geopolitical conflicts, we can provide our customers with viable alternatives to mitigate impacts. The Harvard Business Review recently reported that “carefully vetting alternative suppliers in non-targeted regions will be increasingly important” to avoiding supply chain disruptions and unexpected customs duties.  

At Flex, our Global Trade Team possesses in-depth expertise and knowledge of global supply chain disruptions, tariffs, and other geopolitical dynamics to help our customers confidently navigate challenges. Moreover, our in-regional manufacturing and forward-logistics and value-added fulfillment capabilities help our customers meet changing regulatory and sustainability requirements.

We also screen 100 percent of new global suppliers to ensure that they meet quality, ethical labor, and environmental criteria, so our customers do not have to spend time vetting new suppliers or carry the risk of working with suppliers with less-than-ideal practices.

Additionally, our award-winning Supplier GHG Emissions Reduction Program is designed to share knowledge, resources, and best practices to help our preferred suppliers measure emissions, set reduction targets, and support sustainability goals—both for us and our customers.

At the same time, we deploy these tactics and tools to achieve manufacturing and supply chain resiliency across our own sites and global operations. Our extensive footprint allows us to shift operations as needed to another site or region, while our multi-sourcing strategy helps us mitigate disruptions. With decades of experience in bolstering supply chain resiliency both for ourselves and our customers, we are well-equipped to help companies prepare for any challenge that arises.

Conclusion

Supply chain resiliency will continue to be imperative for companies operating in today’s ever-evolving landscape. Companies need to do more than see what is happening in their supply chains—they also need to be able to convert that data into actionable solutions that mitigate risks and ensure business continuity.

Gartner makes the case for “elastic supply chains” that can respond to global risks and opportunities, stating that, “effective scenario planning must incorporate the changeable nature of geopolitical risks, with AI and advanced analytics playing increasingly important roles in analyzing data from suppliers, governments and the media. The best supply chains anticipate—rather than merely react to—geopolitical shifts that present new opportunities or risks.”

Engaging a company like Flex provides companies with a supply chain and manufacturing partner at every step of the product lifecycle, solving supply chain challenges by delivering:

• Supply chain design that detects and eliminates early risks
• Real-time supply chain visibility all the way down to the part level
• A global footprint and trusted supplier network for optimal flexibility
• Over 50 years’ expertise and investment in digital tools