Supply chain disruptions can be scary under any circumstances, but we all felt the global pandemic’s effects on the supply chain. Who will ever forget walking into their local grocery store to see empty shelves and limits on personal items and meat?
In our modern world, we all expect to order items and have them delivered in a timely manner. But when disruptions occur, we begin to see the dependency we have on supply chains that, under other circumstances, we wouldn’t even think about.
In a study conducted by the Institute for Supply Management, almost 75% of the businesses surveyed had experienced supply chain disruptions as a result of the COVID-19 outbreak. In this same survey, 57% of respondents said they were facing longer lead times for orders with suppliers in China.
The results of supply chain disruptions, whether a local natural disaster or a global pandemic, are unavoidable. The key is to be prepared with a strategy to overcome these obstacles.
WHAT IS A SUPPLY CHAIN DISRUPTION?
In the dictionary, disruption is defined as a break or interruption in the normal course or continuation of some activity, process, etc. Within the supply chain, this breakdown occurs in the manufacturing of goods and their delivery to businesses or customers.
Think of an actual chain made up of overlapping parts. If any of the parts break, the whole chain is affected. The same is true for supply chain operations but on a much more complex scale. Once there is a break in the process, the impacts are felt throughout the organization.
Disruptions can take on various forms. From transportation and quality issues to natural disasters (and yes, even global pandemics), no supply chain can fully protect itself against these disruptions. But every business needs a plan of action to prepare for the worst while hoping for the best.
FOUR WAYS TO PREPARE FOR SUPPLY CHAIN DISRUPTIONS
DEVELOP AND DOCUMENT AN EMERGENCY STRATEGY
“Before anything else, preparation is the key to success.” Alexander Graham Bell
Though we know disruptions are unavoidable, having a well-developed and documented strategy will help mitigate the effects to your customers and your business. Get key stakeholders in a room to discuss what options are available, brainstorm ways to obtain products, and move goods. We even recommend setting aside an emergency budget, if possible, to drive business while orders aren’t being filled. Once the plan is set, write it down and make it accessible. When the disruptions occur, you’ll be able to quickly pivot to your emergency strategy.
DIVERSIFY YOUR SUPPLIERS
Though this can be a costly option, diversifying your supply chain suppliers can significantly reduce the risk of disruption (or shorten the length of time), especially if suppliers are spread out geographically. If winter weather impacts the North East, but you have the option of obtaining goods from a supplier in the south, you’re saving your supply chain from major impacts, especially with customers. The key is to balance the added cost of multiple suppliers with the impact the disruption would have on your bottom line.
Another way to diversify suppliers is through developing relationships with backup suppliers. In this example, a supply chain would have a few vetted suppliers to contact if a disruption occurs. This creates a lower cost for your business because the cost is only incurred in the event your supplier cannot deliver goods.
BUILD UP SUPPLIES
After identifying your most popular products, create a back of these items to keep in storage if orders can’t be filled due to disruptions. From raw materials to finished goods, it’s imperative to have extra inventory on hand to maintain your business if supplies are running low. There is always the possibility of a wildly unexpected event disrupting the industrial The pandemic has been a clear example of this. However, with a little forward-thinking, businesses can find ways to minimize the impact of other more common disruptions to their customers.
ENHANCE THE FOUNDATION OF YOUR SUPPLY CHAIN
The strategies previously mentioned all address how to manage disruptions. Still, it’s important to note that enhancing your business model’s foundation will also help mitigate disruptions before they occur. “Now is the time to embrace new solutions to proactively resolve supply chain issues with ongoing insight to continually optimize logistics for maximum efficiency, performance, and profit.” writes Mark Dohnalek for Supply Chain Management. With the proper planning and partners, supply chain leaders can obtain the agility needed to compete in our rapidly changing markets.
Disruptions are inevitable. Outside influences impact even the most well-seasoned supply chains. Partnering with a 3PL, like WSI with over 55 years of experience, won’t stop all disruptions, but it can help with the planning and execution when they occur. All 3PL providers must be mindful of changes in the supply chain and shifting compliance requirements to ensure continued profitability and high performance. How can we help your business get ahead of disruptions?