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Restructuring Supply Chain for Reliability

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Restructuring the Supply Chain - Man working in the warehouse
Steve Thompson
Steve Thompson
August 26, 2022

The concept of supply chain restructuring was developing before the pandemic, so the wheels had already been set in motion for a new transformation into the digital realm. Digital transformation is now a major concern among supply chain participants. Here's a look at essential points on restructuring the supply chain for reliability.

Why Supply Chain Restructuring is Happening

Many companies see the writing on the wall that digital technology is not only here to stay; it's becoming a part of every facet of business and human concern. Over the past decade, warehouse and transportation businesses have significantly evolved with cloud-based software platforms that simplify business management complexities. The advent of IoT sensors placed throughout a supply chain gives each member access to a wealth of valuable real-time data on a market's supply and demand levels.

The combination of various global events, including consolidation in the shipping industry, has led to supply chain bottlenecks at major ports. Due to these slowdowns, businesses must reevaluate their list of suppliers and seek to maintain relations with the most reliable players. Unreliable players need to be replaced by those that prove to be more sustainable.

Part of supply chain restructuring involves outsourcing to companies that can improve your logistics, such as a third-party logistics (3PL) firm. Outsourcing IT is becoming more common in a business environment with constantly changing technology. Automation has become a key tool for improving efficiency, as it can get more work done accurately in less time than a human. Automated processes have helped resolve labor shortage issues for many businesses.

Impact of Global Trade on Supply Chains

USA and China containers - Trade War

Part of restructuring the supply chain for reliability concerns global trade issues affecting supply chain operations. Imports and exports are regulated by governments based on negotiated trade agreements. The U.S. trade war with China has strained relationships and disrupted the supply chain.

One of the reasons China's supply chain system was resilient during the pandemic is how the nation's manufacturing has evolved to a level of mass production efficiency, leading to surplus supplies. Even though many companies have left China due to rising costs, decades of investments in the nation's economic ecosystem ensure it will maintain a healthy amount of producers for years to come. That's the assessment of MIT Professor Yossi Sheffi, also Director of the MIT Center for Transportation and Logistics.

Mexico has been gaining global market share thanks partly to its trade agreement known as the USMCA with the United States and Canada. China is expected to maintain supply chain dominance in markets such as Industrials, Manufacturing, and Transport (IMT), as well as Energy, Mining, and Infrastructure (EMI).

Cutting Operating Costs

Calculator and graphics that says "cost"

A primary focus of any business should be how to reduce operating cost. Even if the business is well-capitalized, it's still important to reduce costs to increase profit margins. One of the best ways to cut operational costs is to examine labor, payroll, and employee benefits. Ask yourself if a smaller staff can still handle the workload without losing customers.

You can further cut costs by putting together a cost-cutting plan. It should include investing in technology for company finances, marketing communication, and a website that serves as an online hub for the business. It's possible to run a business from anywhere remotely with the help of a cloud-based remote team.

Sharper Focus on People and Technology

Another major part of supply chain restructuring toward digital streamlining is embracing the concept that people and technology go together. That means the company needs to pay closer attention to the talent and technology it purchases. A competent team needs to be trained to use new technology how it was intended to maximize production and efficiency.

Staying up to date with new technology is a job for either an on-site or outsourced IT team. Team members must understand how to use digital assets without compromising data privacy. Qualified IT professionals can accelerate a team's understanding of how to network safely and beware of potential cyber threats.

Emphasizing Sustainability

Sustainability - Man working on the calculator while holding an eco-friendly lightbulb

There's a growing emphasis among supply chains on adopting sustainable solutions since this thinking helps resolve challenges posed by supply shortages. A big part of sustainability is going green. The cost of environmental damage and cleaning it up becomes more expensive every year, as most businesses that participate in mass production have some level of carbon footprint. Reducing waste and environmental damage that causes health problems are top concerns among businesses seeking greater sustainability.

Supply chain diversification is an ongoing trend as a strategy to be less dependent on traditional resources. It involves exploring new distribution avenues while maximizing land, labor, and logistics. One machine that's growing in prominence due to COVID-19 has been the 3D printer, which is ideal for social distancing and on-demand short-run production.

Digital transformation contributes greatly to sustainability, as automated processes speed up redundant tasks that can cause fatigue for workers. Keeping all your data organized in a digital system helps warehouse team members locate inventory items swiftly. A recent IDC study found that the main drivers of digital transformation among supply chains are to meet customer demands, meet industry standards and deal with competitive pressure. Additionally, there's growing consumer demand for more flexible products and services.

Government Intervention

Governments worldwide are playing a role in supply chain restructuring in the sense they are setting policies that affect global trade. Governments need to take action when critical raw materials become scarce. Another way governments will be involved with supply chain restructuring is by offering low-cost loans and financial subsidies that create new jobs and encourage more efficient production.

Rising Corporate Importance of Supply Chain Managers

Supply chain managers are poised to rise in the corporate hierarchy in the next decade since they will play a crucial role in achieving financial efficiency. Despite plenty of grim economic news throughout the pandemic, supply chain managers were able to navigate through the challenges and keep customers satisfied. A supply chain that proves resilient in such a crisis is worth studying when it comes to restructuring the supply chain for reliability projects.

The pandemic caused many businesses and consumers to pay closer attention to supply chains. What's amazing about resilient supply chains that overcame pandemic challenges is they were able to adapt and respond to growing concerns about food and medical shortages. The food and medical supply chain systems maintained smooth distribution as the fear of supply shortages in these industries dissolved.


The move toward restructuring supply chain for reliability has been underway for several years and became more noticeable during the pandemic. Global supply chain challenges have created greater awareness for businesses to manage supplies more efficiently. If you keep plenty of supplies in a large warehouse, make sure pallets are on your list of supplies that improve supply chain reliability.