Supply Chain
Resilience ReportIndustry trends and supply chain strategy
for manufacturing

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Thank you for your interest in this trend reportby Protolabs. This report was originally publishedby Hubs, a company acquired by Protolabs in 2021,
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72%
of companies have experienced externally caused disruptions
to their supply chain over the last 10 years, with COVID-19 being
the biggest disruptive event96%
of companies believe measures should be taken to avoid
future supply disruptions, following the outbreak of COVID-19

52%
of companies have so far managed to implement measures
to build supply chain resilience59%
of companies believe geographically distributing
their supply chain is the best way to avoid disruptions in the future

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Table of contents
Introduction: Supply chain resilience - what it means and why it matters

5

Defining supply chain resilience5

The rising need for resilience

6

Building supply chain resilience in your organization

7

The rising risk: The growing number of supply chain disruptions over time9

Not all disruptions are created equal

10

Top supply chain concerns

11

COVID-19 spotlight: An extreme example of supply chain disruption

17

Global online manufacturing supply capacity

17

The flow of supply and demand

19

Building supply chain resilience:
Effective measures organizations can take to mitigate disruption

22

1. Creating autonomy

23

2. Developing flexibility

26

3. Increasing visibility

29

Conclusion

31

About this report32

References

33

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Introduction

Supply chain resilience what it means and why it matters

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Introduction
Supply chain resilience - what it means and why it matters
Complex manufacturing supply chains face more risks than ever. A disruption in one
country ripples around the world, leaving unprepared companies to experience damaging
interruptions. Simultaneously, the number of disruptions is rising. As each risk has uniqueelements and timing, planning and prediction is impossible. Traditional strategies don’t
support the flexibility and adaptability required to survive, let alone grow stronger.
But some organizations react to disruption far better than others. These organizations
cope with unknown and unknowable risks due to one characteristic: resilience.

Defining supply chain resilience"Supply chain
resiliencedescribes a supply
chain preparedfor unforeseen
disruptions able
to react andrecover fast, andemerge stronger
after the event."

Supply chain resilience describes a supply chain prepared for unforeseen disruptions,able to react and recover fast, and emerge stronger after the event.
Though many companies believe supply chain resilience merely implies the ability
to manage risk, true resilience enables you to position your organization better
than competitors in order to deal with and gain advantage from disruptions.[01]Resilience is not a new concept, but the need for it has become greater as the frequency
and severity of risks have increased, which comes naturally with an evermore complex,
globally-stretching supply chain. Supply chain resilience does not develop passively,
as it’s impossible to plan for every potential risk. Instead it demands a dedicated,
deliberate strategy to strengthen your organization in the face of the unexpected.
Resilience is crucial to the manufacturing industry, as generating revenue relies on
adding value at each link of the supply chain, from the raw materials to the finishedproduct. If one of these links becomes broken, or disrupted, value can no longer be
added, making a resilient supply chain essential to bringing products to market.

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The rising need for resilience
From trade wars to pandemics to changing labor environments, supply chain resilienceis becoming a priority for many companies. The rise of global trade means companies
have more moving pieces stretched over greater distances with less slack in the system.
And with a growing global population and a growing economy, significant supply chain
disruptions are inevitable.[02]Simultaneously, companies are still relying on a single company for certain parts in orderto achieve lower costs.[03] Reducing essential processes and resources to a single ora few sources creates a dependency on deep-tier suppliers as well as on concentrationsof supply sources that create fragile chokepoints in the global economy. Only a handfulof countries are responsible for the world’s supply (see Figure 1) and, as many companies
experienced with the coronavirus outbreak, this over-reliance can have catastrophic
long-term effects on supply chain operations.
Disruptive events can have material impacts on financial performance. Apple profits fell
by 2.7% in the second quarter compared to 2019 due to COVID-19’s unprecedented global
impact,[04] while at the same time businesses like Hertz, J.Crew and Neiman Marcus filed
for bankruptcy.[05] Back in 2018, Ford lost $1.6 billion in revenue and was unable to produce
35,000 vehicles owing to a fire in one of their plants.[06]Additionally, a fragile supply chain often leads to damage to a company's brand reputation
as customers express their displeasure.[07] With the rise of social media and 24/7 news,
there’s a growing brand risk based on rapidly shared public opinion.[02]Unfortunately, disruptions cannot be avoided. Instead, companies must prepare to
overcome challenges, which may mean rolling back some supply chain innovationsof recent years, such as lean manufacturing, in order to develop long term resilience.

Figure 1: China is the World's manufacturing superpower
Top 10 countries by share of global manufacturing output in 2018*
China

28.4%
16.6%

United States
7.2%

Japan
5.8%

GermanySouth Korea

3.3%

India

3.0%

Italy

2.3%

France1.9%

United Kingdom

1.8%

Mexico1.5%*output measured on a value-added basis in current U.S. dollars
Source: United Nations Statistics Division

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Building supply chain resiliencein your organization
Having a clear strategy to mitigate supply chain disruptions is the first step to developing
the resilience that will satisfy customers and reduce the economic impact of events.
Going forward, this report will examine the reasons behind the increasing numberof supply chain disruptions, with a feature section in Chapter 3 that explores the effects
of COVID-19 on the world’s supply capacity supported by Hubs platform data.
The final chapter will discuss three primary approaches, listed below, to help strengthen
your organization’s supply chain:
1. Creating autonomy
2. Developing flexibility
3. Increasing visibility
These actions are designed to assist you in managing risk during the rising amountof supply chain disruptions. After all, it's not a matter of if your organization will
experience disruption; it's only a matter of how often and for how long.

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The rising risk

The growing number of supply chain
disruptions over time

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The rising risk
The growing number of supply chain disruptions over time
Supply chain volatility is not a new phenomenon, but it is occuring more frequently,
affecting a range of different industries and regions due to an increasing array of threats.
In parallel, supply chains have become more complex and brittle as a result of globalization.[08] The more complex businesses become, the broader the spectrum of threats.
This chapter begins by discussing the level of damage and predictability associated witheach type of disruptive event. It then continues by examining the increase of certain
supply chain disruptions and their causes.

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Not all disruptions are created equalWith the rising number of supply chain disruptions, it’s common for businesses to focus
their attention on events that are easier to anticipate and control. However, developing
supply chain resilience will mean examining all variations of risk, and deciding to tackle
each disruption type deliberately and strategically, rather than concentrating on the most
predictable risk.
Generally, disruptions can be assessed on the basis of two factors: their predictability, as
companies seek to plan long term, and how impactful they are, in terms of the magnitudeof the disruption they cause to manufacturing supply chains. Figure 2 summarizes themost common and relevant disruptions that currently face supply chains, categorized bytheir level of predictability and impact.
A robust supply chain strategy should aim to mitigate disruption in each quadrant. The
quadrant of Low Predictability paired with Severe Impact is one that is often ignored, as
it is the hardest to anticipate which effects will be the consequence of these disruptions.
These disruptions, sometimes referred to as “unknown unknowns” or “Black Swans”[04],are difficult to imagine occurring, let alone to develop a targeted strategy to reduce theeffects. However it’s clear, with the coronavirus pandemic being the harshest, most recent
example, that these Black Swans demand sufficient attention to avoid the devastating
aftermath. A resilient supply chain will allow your organization to better cope with a rangeof different disruptions, both known and unknown.

Figure 2: Supply chain disruptions categorized by level of predictability and impact

Terrorist attack

Pandemic

Fire
Cyber attack

Wind damage
Low

Flood

Predictability

Storm
Loss of important supplier
Earthquake
Economic recession

Loss of talentHigh

Brexit
Evolving
customer needs
Alterations tolegislation+ compliancestandards
Mild

US - China
trade war

SevereImpactSource: Hubs

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Top supply chain concerns"72% of companies
have experienced
some form of external
disruption overthe last ten years"

According to a survey conducted in June with 1,281 respondents, 72% of companies
have experienced some form of external disruption to their supply chain over the last ten
years. In 2019, companies were challenged by a dramatic escalation in trade tension andby sophisticated, large-scale cyber-attacks. At the same time, production and logistics
operations survived a broad range of disruptive events, including natural disasters,industrial fires and explosions, production restrictions, labor disputes, port disruptions,and cargo and warehouse theft.[09]Despite the numerous types of supply chain disruptions mentioned above that could
occur, there are three key categories that risk managers have reported to fear the most:natural disasters, geopolitical issues and cybersecurity, as we see reflected in Figure 3.

Figure 3: Fastest rising supply chain risks
Respondents are increasingly concerned about a variety of threats

2016 % very concerned2017 % very concerned
YoY Jump

50
45
40
35
30
25
20
15
10
5
0

15

19

War, terrorism or othergeopolitical issues

18

44

30

Natural disaster affecting supplierfacilities (e.g., earthquake, flood)

Source: SCM World Future of Supply Chain surveys
2016, 2017 (preliminary results)

Supply chain
resilience report

26

Data security / IT incidents(e.g., cyber attacks)% of respondents 2016 n=1, 409
2017 n=1, 193 (prellminary results)

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"9% of companies
experienced
a cyberattack in
the past ten years"

These concerns mirror the reality of the previous supply chain disruptions over the lastten years, shown in Figure 4, although there are some major differences.
Natural disasters and trade wars (i.e. geopolitical issues) were ranked in the top
three most disruptive events, but the reality of cyberattacks disrupting businesses isdisproportionate to the level of concern. A mere 9% of companies actually experienced
a cyberattack in the past ten years, despite 44% expressing their concern for data security
or IT incidents in 2017.[10]The severest disruption over the past ten years was pandemics with 59% of businesses
being impacted, presumably most extremely by the recent novel coronavirus.
Chapter 3 has therefore been dedicated to examining the effects of the coronavirus
pandemic on manufacturing supply.
Despite the actuality, pandemics did not even place in Gartner’s rising supply chain risks.[11]This should indicate to businesses not to focus on the specific potential threats and theireffects on the supply chain. Rather it should push professionals to devote resources tobuilding overall supply chain resilience in order to respond to and recover quickly fromunanticipated disruptions, such as COVID-19.
The following sections examine why these disruptions are a growing worry andthe reasons behind their prevalence.

Figure 4: Top supply chain disruptions that have impacted businesses in the last 10 years

Pandemics

59%

29%

Natural disasters

21%

Trade wars

9%

Cyber attacks

Military conflicts

4%

Q: Which supply chain disruptions have impacted your business in the last 10 years?
Source: Hubs survey, 1,281 participants, conducted June 2020

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Geopolitical issues"60% ofInterest in politically driven trade conflicts connected to manufacturing, particularly in
the US, has grown by almost 250% over the past 10 years.[11] The interest from the US isorganizations
driven by conflict with China, with tariffs and punitive responses leading to rising tensions
have reported
and higher costs of goods. More than 60% of organizations have reported negative
negative financial
financial and/or operational consequences resulting from the US-China trade wars.[12]and/or operational
consequences resulting In response to geopolitical tensions with China, some organizations have sought new
locations for production facilities, either re-shoring or relocation to other nations with lessfrom the US-China
tariff exposure.[13]trade wars"
Brexit is another disruptive event that will have global implications. The situation is stilldeveloping, so companies inside and outside the UK are unable to plan for any form of
an international trading environment. Political events such as Brexit highlight thevulnerability of relying on only a few key suppliers in critical locations. Moving centralized
production to a new location can be an expensive and lengthy endeavor and result ina similar risk at the new site.
Organizations are unclear which trade costs and documentation will be required, and bothsuppliers and customers will be affected in terms of labor costs and trade rules.[14]Companies could experience disruptions in trade flows between the UK and the EU as wellas other trading partners.
Potential implications of a hard Brexit (where the UK would to leave the EU without a tradedeal, defaulting to WTO rules) for manufacturers include:[13]• Increased lead times (due to customs)• Administrative overhead• Inventory build-up• Import tariffs for components and finished goods• Increased operational costs

These changes could lead to manufacturing disruptions across many industries owing
to broken links in the supply chain.

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Natural disasters

The mounting effects of climate change, from earthquakes to floods, tsunamis,
hurricanes, volcanic eruptions and storms, are taking their toll on supply across theworld. The number of natural disasters is rising year-over-year from 1980 to the present,
according to research from McKinsey (see Figure 5).[13]The effects of a hurricane, for example, can be long-lasting. Hurricane Harvey struck
Texas and Louisiana in 2017, causing $95 billion in damage with the average recovery
time for an affected business at 17 weeks.[13]Japan’s earthquake and tsunami in 2011 caused Toyota Motors a 99% drop in quarterly
profits.[15] While the eruption of Icelandic volcano Eyjafjallajokull in 2011 affected the
production of 2,000 Nissan cars, and halted production at three of BMW’s plants.[16]The US alone experienced 265 weather and climate disaster events, each with more than
$1 billion in damages, between 1980 and 2020.[17]For organizations struck by natural disasters, the supply chain is disrupted in both
directions, for consumers as well as producers of goods and services. Unfortunately,companies have no control over this aspect of their business, and can't anticipate relief
from their governments.

Figure 5: The rising number of noneconomic disruptions

1980

1985

1990

1995

Climatic catastrophes
Hydrologic catastrophes
Meteorological events
Geophysical events

2000

2005

2010

2015

Source: McKinsey Agile Operations

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Cybersecurity$13 million is theaverage cost of acybercrime incident

It varies from company to company, but the rise of digital has meant cybersecurity is
becoming a growing risk to the supply chain.
A number of companies have suffered ransom attacks or loss of data that has caused
long-term operational and legal exposure. In addition to deliberate attacks by bad actors,
technology is vulnerable to software glitches and telecommunications failures.
In 2019, 25% of companies experienced four or more cyberattacks in a year.[18] The average
cost of cybercrime for an organization reached $13 million per incident. Overall, security
breaches have risen 67% in the past five years, averaging 145 breaches per organization.[19]Cybercriminals have moved past stealing information and are now targeting industrial
control systems and other core systems. Holding technology assets for ransom isa growing trend.
Manufacturing and supply companies are on the front lines of cyberattacks due toincreased digitization and connectivity. In 2019, a ransomware attack crippled industrial
controls at manufacturers around the globe. Manufacturing companies are becoming
favorite targets of advanced persistent threats. In 2019, Resilience360 recorded
290 cyber security incidents against supply chain companies.[20]Summary

It's critical to begin thinking about a risk-management framework to classify risks andto develop a supply chain that is by design flexible and adaptable. The storms may comeagain, cybercriminals never rest, and governments are unpredictable. You can't think of
disruption as a one-and-done event. The simultaneous increasing vulnerability in supply
chains and the growing number of disruptions means businesses must start making their
supply chains more resilient now.

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COVID-19 spotlight

An extreme example of supply chain disruption

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COVID-19 spotlight
An extreme example of supply chain disruption
Nearly two thirdsof companies
have experienced
disruption due to
COVID-19

The COVID-19 pandemic has had a global impact and the financial repercussions are still
unfolding. Nearly two thirds of companies have experienced disruption due to COVID-19,
according to our survey, making it the most disruptive event to the supply chain in the last
decade. Manufacturing was the top industry affected in terms of personnel, supply chain,revenue, and operations.[21]Because the coronavirus pandemic is one of the first examples where manufacturing
capacity has been affected simultaneously worldwide, it's an illuminating case study on
the consequences of concentrated vs. distributed manufacturing. The crisis highlighted
the shortcomings of single-source manufacturing, whereby one sole vendor is selected
to produce a component part, or sometimes an entire product. The prevalence of chokepoints became very apparent as shutdowns rolled across the world and the manufacturingbases in a particular country became idle.
COVID-19 is a unique situation because it affects both supply and demand. Many companies faced immediate loss of supply when China began isolating in many parts ofthe country, with no alternatives. Labor shortages, lack of available inventory, and insome cases an excess of inventory, have challenged organizations' supply chains. Some
industries with available inventory were able to ramp up to meet heightened demand,
while others were unable to fulfill orders regardless of changes to pricing.
The next sections analyze supply and demand data collected through the Hubs platform
to portray an overview of the real effects of the COVID-19 on the manufacturing supply
chain.

Global online manufacturing supply capacity
Figure 6 gives an overview of available global manufacturing capacity during
the beginning of the coronavirus pandemic, based on sourcing data from Hubs’
online manufacturing platform.
Since the beginning of January until the end of May, supply capacity across Asia, Europe,and North America has been particularly volatile. Europe was the most stable, fluctuating
by 8%, closely followed by North America which varied by 10%. By comparison, Asia wasrelatively unstable at 18%.

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Asia
EuropeNorth America

Figure 6: Manufacturing orders sourced by continent% of orders sourced

100%

75%

50%

25%

0%
Jan 6

Jan 20

Feb 3

Feb 17

Mar 2

Mar 16

Mar 30

Apr 13

Apr 27

May 11

Source: Transactional data from Hubs online manufacturing platform

The direct impact of the pandemic becomes more apparent by comparing the numberof COVID-19 cases against the number of orders that were sourced in India and China,
shown in Figure 7. It's clear that as the number of coronavirus cases rose, the supply
decreased significantly, and then recovered as the number of cases dropped.
As supply capacity fell in China, with factories closing down at the beginning of theoutbreak in January, production briefly peaked in India as orders shifted away while China
was in lockdown. In April, as India went into full lockdown, the country saw the steepest
drop in supply, but during this same period China had begun to steadily recover and wasable to compensate for India's drop in capacity.

Figure 7: Manufacturing orders sourced in China vs India

China
India

50,00030,00020,000Weekly Covid Cases

Number of sourced orders

40,00010,0000

0January '20

February

March

April

May

Source: Hubs and Our World in Data

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The flow of supply and demand
Figure 8: Supply vs demand by continent
January
North America (37%)
North America (58%)
Asia (38%)
Europe (41%)
Europe (26%)

Asia (1%)

February
Asia (20%)

North America (53%)

Europe (36%)
Europe (46%)
North America (44%)
Asia (1%)
March

SupplyNorth America (52%)

Europe (29%)
Europe (47%)
North America (33%)

DemandAsia (38%)

Asia (1%)

April
Asia (40%)
North America (57%)
North America (34%)
Europe (43%)
Europe (26%)
Asia (1%)
May
Asia (36%)
North America (59%)
North America (37%)
Europe (40%)

Europe (27%)

Asia (1%)
Source: Hubs

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Supply capacity
fluctuated per
region, but
globally suppliers
could keep pacewith demand

The sankey diagrams in Figure 8 depict how drastically supply and demand mirrored thedisruption as the pandemic spread across the world. Looking at the flow of supply anddemand during the first five months of 2020, February experienced the steepest drop in
supply capacity from Asia, which dropped 18%. During this month, supply became more
local, shifting away from Asia and towards Europe and North America.
In March and April, the supply capacity in Asia began to recover, while at the same time
capacity in Europe started to fall. If North American or European companies were wholly
reliant on Asia for supply, with no easy access to local suppliers, their businesses would
have ground to a halt in February, near the beginning of the COVID-19 outbreak.
However throughout this entire five month period, supply capacity has fluctuated per
region, but globally suppliers were able to keep pace with demand. Therefore, if anorganization were to build out a network of suppliers distributed across the globe, there
will always be supply (and demand to meet it) available. This distributed approach is the
future of resilient manufacturing which offers reliable and scalable supply.

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Building supply
chain resilience

Effective measures organizations can taketo mitigate disruption

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Building supply chain resilience
Effective measures organizations can take to mitigate disruption
48% of companies
have not taken any
measures to build
supply chain
resilience

As we’ve seen with the simultaneously rising complexity of supply chains and theincreasing number of disruptions, a clear strategy for building supply chain resilience tomitigate future disruptions will be essential for businesses moving forward.
However it seems that although organizations have coped with supply chain disruptions
first-hand, a large proportion are unprepared. We found, by surveying 1,281 companies,
a surprising 48% of companies have not taken any measures in the last 10 years to build up
supply chain resilience, despite 72% having experienced externally caused disruptions.
This chapter discusses the three approaches your organization can take to start buildinga resilient supply chain:
1. Creating autonomy (automation, additional inventory)
2. Developing flexibility (geographical diversification, agile working processes)
3. Increasing visibility (stronger supplier relationships, increased monitoring)
These approaches are mirrored in the responses we received from the same survey
mentioned above, where participants selected what they found to be the most effective
measures to reduce disruptions in the future, shown in Figure 9.

Figure 9: The most effective measures to reducing supply disruptions in the future

Geographically diversifying
your supply chain

59%

Strengthening relationships
with suppliers

47%

Automating processes
within your supply chain

34%

Increasing transparency of
your supply chain

27%

Q: What measures do you believe would be most effective for reducing disruptions in the future?
Source: Hubs survey, 1,281 participants, June 2020

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1. Creating autonomy
Supply chains that stretch across the globe are complex and inevitably subject tosome level of disruption. But simplifying your supply chain where possible and reducing
dependency on external parties will leave you less vulnerable to potential disruptive
events. Practically, there are two key ways for reclaiming control of your supply chain:automation and buffer inventory.

Automation

Autonomy can be created through automation from both an internal and an external
perspective.
Internally, automation reduces your reliance on manual labor, which is particularly
advantageous if production plants are forced to go into full lockdown — a case we saw
occur during the beginning of the coronavirus. Companies which have deployed robotic
process automation found they can execute processes five to 10 times faster with 37%
fewer resources on average.[22]Externally, by reducing links in the supply chain and increasing the speed of outsourced
production, companies have more manoeuvrability and can react and adapt more quickly
to disruptive circumstances. If, for instance, the lead time for a certain part is thirty days,
the parts in that order are stuck in production for the duration, and it can be a challenge
to reroute to a different operational manufacturer or cancel an order. Additionally, speed
in your supply chain leads to a faster recovery after the disruption.
For example, the quoting process, or RFQ and DfM process, for outsourced manufactured
parts, can be reduced to seconds, rather than the traditional manual part quoting process,which can take anywhere from days to weeks. There are now platforms, like Hubs, thatscan CAD files and give you a quote in a few seconds, allowing companies to radically
cut down on pre-production time and receive parts 45% faster than traditional methods(see Figure 10).

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Figure 10: Time needed for automated vs manual Request for Quotation (RFQ)and Design for Manufacturing (DfM) for manufactured parts

RFQ & DfM
Lead time
Shipping

ManualAutomated

1 week2 weeks

3 weeks

4 weeks

5 weeks

Source: Hubs

Volkswagen automating Zickau plant
to produce up to 330K electric cars per year
Since 2018, the Volkswagen Group has been
investing heavily in automation to become
the largest and most efficient electric car
plant in Europe. The cockpit assembly is
now fully automatic and a robot automaticallyinstalls the rear and front axles on the
chassis frame. Automation has also been
incorporated in other areas of the plant,
aside from assembly, to automatically inspect
the surfaces after final assembly and todeliver and unload the batteries forthe electric vehicles.

Supply chain
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In the future, the Volkswagen Group islooking to automate other processes likethe fine tuning of the chassis in the car,and the sorting of finished pressed components
with computer vision. This investment inautomation means the Volkswagen Group is able
to accelerate their processes and rely lessheavily on manual labour in order to produce
up to 330,000 electric cars per year from2022.[23]press@hubs.com
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Additional inventory

By creating redundancy at various points in your supply chain, you can buy yourself
extra time once a disruption hits. In the best case scenario, you’ll have enough inventory
to continue operations during the disruption. Otherwise, you’ll at least have more time toprepare a thorough contingency plan.
This approach is especially valuable for critical parts, where it may be more difficult toswitch suppliers quickly. Although effective, this solution is costly, as you’ll need to pay
for storage and non-revenue generating stock.

Learn more about how supply chain inventory buffers can mitigate risk in this article

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2. Developing flexibility
As Elon Musk has put it, “It's OK to have your eggs in one basket as long as you control
what happens to that basket.” The issue in manufacturing is that the supply chain is socomplex and contains so many moving pieces, you will never control the basket and will
never become completely self-reliant.
Therefore, a key factor in supply chain resilience is planning for disruptions by spreading
your risk. While you may not have a specific plan in place, you can strategize a responsewhen key external suppliers are not able to meet their commitments. These approaches
to developing flexibility are discussed below.

Make it easy to shift production between facilities

Geographicaldiversificationis the mosteffective measure
to building supply
chain resilience

Don’t rely on a select number of suppliers, or even on a certain geography where all yoursuppliers are based. As we’ve seen during the height of the coronavirus pandemic, entire
countries or regions can be affected by disruption with zero supply capacity.
Instead, focus on diversifying your supply. Build a quality-vetted, geographically
distributed network of engaged suppliers that you can rely on to take on more capacity
when needed.
Geographically diversifying your supply chain was voted the number one measure to
reducing the impact of future disruptions (see Figure 9), which is understandable given theeffectiveness of a distributed network during the beginning of the coronavirus pandemic.
As we saw in Chapter 3, when China went into lockdown at the beginning of 2020,
the majority of manufacturing orders shifted to India, and some to Europe. Two months
later, India entered into full lockdown, cutting off supply completely, but as China was ina period of recovery, it was able to compensate for India’s lost supply capacity.
Despite entire regions being in total lockdown during the pandemic, supply capacity
remained available across the world during the whole of 2020, further highlighting thestrengths in building a distributed network of suppliers.
As an alternative to diversifying your supply chain yourself, which is a time-consuming
and complex process, you can rely on specialized manufacturing platforms, such as Hubs,
to provide you with instant access to a distributed network of hundreds of quality-vetted
suppliers.

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Hubs’ distributed manufacturing network is made up
of 240+ suppliers, spread across 4 continents

Encourage agility in your internal working processes

There are many techniques to making a business more adaptable to change. These include
working in an agile process, completing tasks simultaneously instead of sequentially. With
this way of working, you can easily reallocate resources where needed, adapt unfinishedproducts to meet demand, and iterate on product design faster.
Reallocating your resources not only includes adapting parts or unfinished products,
but also cross-training employees, who are then able to help fulfill demand in areas of
the business that are not entirely their own. Research shows that even training plants tomake as little as two different products can achieve extremely high levels of flexibility.[04]Supply chain
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GE using agile to launch new products
in months rather than 5 years
GE Appliances started incorporating an agile
manufacturing approach called FastWorks
in 2013, which involves working closely withcustomers to get direct feedback throughout
the design process. The first product to test
this agile methodology was a refrigerator
with french doors. A small team, with half
the budget, were tasked to redesign every
part in the refrigerator, and to havea working product ready in three months andin production in less than twelve months.
Rather than the previous approach of letting
the sales team guide the specifications of
the product and then launch it, the productdesign team communicated directly withcustomers at every stage of the design
iteration process.

Supply chain
resilience report

In less than a month, they presented thefirst version to customers who shared their(negative) feedback. Taking on theircomments, the product design team managed
to produce a new iteration to discuss withcustomers on average every month. This wasa radical change compared to the previous
secretive process where nothing was revealed
until the public release every five years.
The agile way of working paid off with thenormal rate of sales doubling. GE Appliancesdeveloped stronger relationships with theircustomers and were able to adapt fast to
shifting demand - two key advantages inovercoming supply chain disruptions.[24]press@hubs.com
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3. Increasing visibility
For areas of the business where you cannot control or react fast enough (no matter how
flexible you are), another option is to increase visibility over your supply chain in order tospot oncoming disruptions faster and therefore give yourself more time to react. Methods
for increasing your visibility are explained below.

Monitor your whole supply chain

A lot of companies only monitor tier one or two suppliers, but this doesn’t paint the whole
picture. Delays caused by deeper tier suppliers, or even a lack of raw materials, can cause
disruption throughout your entire supply chain. By closely monitoring suppliers across alltiers, you’ll be able to spot any warning signs well before the consequences of a disruption
take effect.
However, monitoring your supply chain from the raw materials to the finished productcan be a complex and lengthy process. This may explain why this approach was theleast popular according to our survey, with 27% of respondents selecting increasingtransparency in the supply chain as an effective measure to reduce the effects of supply
disruptions.
Thankfully, the complicated monitoring process has become a lot easier thanks to supply
chain monitoring software. This type of software generally comes with these features toautomate much of the manual monitoring and calculations required to have an overview ofsupply chain risk:•	Supply chain mapping

to monitor not only tier one and tier two suppliers, but the entire supply chain•	
24/7 supplier monitoring

which alerts you to disruptions that may affect your suppliers•	
Risk calculation of disruptive eventswith the potential revenue lost

Learn about 4 tools to help monitor your supply chain

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Build deeper relationships with suppliers

Gaining knowledge of possible oncoming disruptions can not only be achieved throughmonitoring suppliers for performance and compliance, but also by developing deeper
relationships with a select group of suppliers, with 47% of engineers sharing a similar pointof view according to our survey.
By developing a close relationship by forewarning the suppliers of any changes in demandor order changes, and perhaps involving them in some product decisions, you’ll receive
earlier updates and alerts of future disruptions further down the supply chain in return.

Getting to the top of Indian supplier’s
priority list during COVID-19

While production in China and other partsof the world had stalled due to thecoronavirus pandemic, Hubs’ manufacturing
partners in India prioritized customer orders
from Hubs over their other customers.
This was largely due to the strong relationship the Hubs supply team has built with allof their suppliers prior to the outbreak.
After following a rigorous quality audit andonboarding procedure, Hubs suppliers receive
a daily check in as well as regular on-theground visits. But the strength of the relationship does not come from a traditional
one-way customer-supplier relationship, butrather a two-way partnership. For instance,
if the supplier has difficulty producing thepart or understanding the customers’ design
requirements, Hubs will work together

Supply chain
resilience reportwith the supplier to fix or improve thoseissues and processes.
Similarly, Hubs returned the favor byprioritizing certain suppliers that were
hit the hardest by the coronavirus pandemic.
During COVID-19, many suppliers lost orders
from the motionless aerospace industry.
To help these struggling suppliers fill theloss of orders, Hubs offered an increased
number of orders to these manufacturers.
Building this deep relationship doesn’t only
come from monitoring or frequent communication, but a partnership where both supplierand customer prioritize the other in timesof need, which can benefit both parties during
a disruptive event.

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Conclusion
Creating autonomy, developing flexibility and increasing visibility across your supply
chain will help your organization to reduce the number of vulnerabilities in the supply
chain, spot upcoming disruptions, and mitigate the effects of disruptions when they
inevitably do occur. These three approaches will not only strengthen the company inthe face of oncoming disruptions, but also serve the company in calmer times.
The number and the type of disruption is out of your control. Resilience is not. Making
the deliberate choice to develop a long-term strategy to overcome disruption, whateverits effects is the only option. Those who don't pursue resilience become ever more
vulnerable in the face of the rising number of supply disruptions, and their wider reachingconsequences, to come.

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About this report
Hubs
July 2020

Editorial:
Tess Roberts (Hubs)
Design:Jungeun Lee (Hubs)
Contributors:
Diego Camelo Martinez (Hubs)
About Hubs
Hubs is an online manufacturing platform that provides engineers with on-demand accessto a global network of manufacturing partners. Users can easily upload their design,
instantly receive a quote, and start production at the click of a button.
Founded in Amsterdam in 2013, Hubs has raised over US$30 million and produced morethan 4 million parts, using various manufacturing technologies, including
CNC machining, 3D printing, injection molding and sheet metal fabrication.
Disclaimer
The information in this report is provided for informational purposes only. This reportwas based on certain assumptions and information available to Hubs at the date of
publication. Hubs does not give an express or implied warranty regarding the correctness
or completeness of the information contained in this report. This report may containforward-looking statements. There is no guarantee that future results, levels of activity,
performance or achievements will be realized. You should not place undue reliance onthese forward-looking statements. Hubs expressly disclaims any intent or obligation to
update any forward-looking statements to reflect subsequent events or circumstances.
The information provided by collaborating companies has not been verified by Hubs.
The image rights remain with the respective originator at any time. Hubs expresses
disclaims any and all liability and will not be liable for any loss or damage arising directly
or indirectly (including special, incidental or consequential loss or damage) from your useof this report, howsoever arising, including any loss, damage or expense arising from, but
not limited to, any defect, error, imperfection, fault, mistake or inaccuracy in this report,
its contents or associated services.

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32 / 35References

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Supply chain
resilience report

Supply chain resilience report
Copyright © 2021 3D Hubs B.V.
All rights reserved.
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