Which strategy is effective in managing the risk of supply chain disruptions?

Supply chain resilience planning is an effective strategy for managing the risk of supply chain disruptions because it focuses on strengthening the ability of the supply chain to adapt to and recover from unexpected challenges. This involves identifying potential risks, such as natural disasters, geopolitical events, or economic shifts, and developing contingency plans to address them. By investing in resilience, organizations can create flexibility within their supply chain, allowing them to respond more efficiently to disruptions when they occur.

This strategy includes measures like diversifying suppliers, maintaining safety stock, and creating flexible logistics arrangements. Such preparedness can mitigate the impact of disruptions, ensuring that operations can continue smoothly, thus preserving customer satisfaction and minimizing financial losses. This proactive approach contrasts with other strategies that may limit flexibility or exacerbate risks, such as outsourcing all functions, which can lead to a loss of control over quality and responsiveness.