While there is a phenomenon in traditional supply chains where suppliers, distributors and customers are all linked linearly, the reality is that most supply chains are multi-layered. For the uninitiated, this means they are multiple single-level collaborations linked or stacked in a seamless chain.

Building a multi-tiered supply chain has many benefits, such as lower costs, reduced capital expenditures, and faster product delivery and higher quality service. But unfortunately, this also greatly increases operational complexity and in many cases severely impacts supply chain visibility. And, with or without the proper resources, SMEs can struggle to manage and sift through data related to individual supply chains.

At least so far, no convenient or consistent solution has emerged to manage data across multiple or traditional chains. The industry is beginning to emphasize "accuracy metrics on demand" capabilities, like the latest release from Interos, prioritizing the rise of real-time, multi-layer and multi-factor risk management tools.

Understand the risks

The more cooks there are in the kitchen, the more likely it is to make mistakes and the more risky the meal is. One chef may concede that ingredients are missing, while another may add ingredients that shouldn't be there. A group of so-called culinary experts adds spices, ingredients, and garnishes to a dish, which results in a meal that looks great but ends up tasting bad due to unforeseen changes, and vice versa.

This example almost perfectly describes the modern multi-layered supply chain. When the market is doing well, there may not be as many setbacks. In other words, even if the ingredients are wrong, these chefs are likely to produce a delicious dish. But unfortunately, the market today is very volatile due to the impact of Covid-19, political turmoil and various world events. This means companies are constantly being forced to re-evaluate complex supply chain configurations, whether forging new partnerships or sourcing entirely new parts and supplies.

To make matters worse, the vast majority of businesses struggle to properly manage their key suppliers even at a superficial level. If shortages or emergencies affect the channel, those at the top may find it too late. Therefore, as multi-layer chains become more complex and diverse, the risk increases exponentially.

What is a multifactor approach?

Certain steps must be taken to improve visibility and reaction times across the supply chain, whether single-tier or multi-tier systems are involved. While that's not the only trigger, the Covid-19 pandemic has certainly brought more attention to how modern supply chains work. Companies that have ignored supplier risk in the past may no longer do so, opting instead to have their supply chains properly managed.

The solution is what is known as a multi-factor approach, which leverages digital technologies to increase visibility and build resilience in the supply chain. In other words, it empowers companies by providing real-time information about their entire supply chain, simple or complex.

That's not all, the multifactor approach also includes some other elements:

Gather inventories of finished goods, raw materials, and alternate suppliers to alleviate future shortages.

Streamline development and manufacturing processes to reduce the impact of incidents.

Localize or relocate production and supply points away from geographical stressors.

Research and develop backup strategies for service or product delivery, such as using pickup logistics or expedited shipping.

Interos' system is a prime example of a mature and reliable multi-factor risk management platform that uses a range of innovative technologies such as artificial intelligence (AI) and machine learning to provide a top-level perspective. Most importantly, it not only informs companies when a problem occurs, but also provides them with alternative solutions, such as a supplier's database and risk profile rating.

In addition to ensuring a more successful and battle-hardened supply chain, this technology can greatly improve existing operations. Multi-factor systems enable rapid analysis, a necessary part of reducing supply chain risk and costs. Thanks to improved visibility, these systems can help negotiate and manage more cost-effective opportunities, such as finding better transportation service providers. In addition to this, they can also help find more budget-friendly raw material sourcing solutions and even display the latest ratings for different countries and suppliers.

Multi-factor digital solutions will become one of a company's most powerful tools.

Build an "escape" tunnel

The Covid-19 pandemic has brought a painful realization that bad things can happen and supply chains can be destroyed. As an important industry, we have always known that this cannot be avoided. Although there have been "black swan" events over the years, it has never been as severe as the new crown pneumonia.

No matter how volatile the market may be, companies hoping to gain momentum must establish a veritable "escape" channel, that is, there must be an array of backup suppliers, solutions and new survival opportunities, so that they can be activated immediately in the event of an accident - use Real-time and digital technologies build multi-factor information systems that enhance a company's management strategy by providing real-time notifications, discovering alternatives, and providing the necessary tools for action.