Supply Chain Issues: Minimize Supply Chain Disruption
Why Are There Supply Chain Issues?
Supply chains are experiencing major disruptions in response to a series of events put into motion by Covid-19 and its impacts on the global economy ranging from shipping route and port interruptions, safety mandates, and lashback from employees.
For many businesses across the world, but especially those in the US, this can have bewildering effects—many decision-makers are left wondering how to handle an evolving problem for which no one really has an answer.
Of course, pandemics are not the only cause of supply chain issues. Natural disasters, product quality issues, transportation break-downs, cyber attacks, and even significant price fluctuations can cause supply chain disruptions. In any case, preparation and precaution can save businesses from making reactionary choices and suffering greater risk when supply chains break down for any reason.
Common Supply Chain Problems
Supply chain problems can rear their head from a huge host of issues ranging from price to volatility to consumer demands. In nearly every form of supply chain issue, automation and data collection can play major roles in strengthening a business against risk of supply chain disruption.
When faced with costs that continue to creep ever upward, businesses have three choices:
- Raise prices on products for consumers which can potentially cause lashback such as loss of business to competitors, even among otherwise loyal customers.
- Stop selling the costly product which can have the same, even steeper, consequences than raising prices. This stop may be indefinite or it may be temporary. Many consumers are experiencing this in the wake of Covid-19—empty shelves are a common sight, even among major big-box stores.
- Eat the costs themselves which quickly digs into profit margins. Of course, there is a point after which it is no longer financially feasible to continue offering products at an unchanged rate, even among loss leader items.
With drawbacks to any of these solutions, increasing decision-making pressure and analysis of a changing landscape can become stressful if not overwhelming to businesses faced with this supply chain problem.
Multiple Supply Chain Channels Complexity
Modern supply chains are not the simple “chains” of yester-year but instead look like complex, interwoven webs that operate more like the cogs in a machine. Customers are no longer limited to a single channel for purchasing products, and this approach calls for adaptable supply chain processes to provide a seamless, enjoyable customer experience no matter how they obtain their products.
Automation can be of great benefit to businesses trying to manage increasingly complex supply chain issues such as multiple buying channels, warehouses, and carrier methods.
Consumer Demands and Expectations
The broad array of choices available to consumers today is astounding. With every industry confronting some type of disruption, consumers now expect to have options. Customization both at the product and experiential levels is becoming an expectation rather than a luxury.
Amid staggering competition, viable businesses have to be able to compete on quality, availability, and price while still providing an outstanding customer experience. Two of the most important factors to achieving this feat are data and an underlying supply chain capable of supporting all of these factors at once.
Supply Chain Volatility
Volatility in anything is something that throws humans for a loop—whether it’s the stock market, the weather, or the supply chain. As it becomes increasingly apparent that our underlying supply chain infrastructure on a global scale may be fatally flawed, supply chain managers are tasked with pre-empting and circumventing as many risks as possible. Without doing this, delays, backlogs, and bottlenecks can cause critical issues for the business.
With volatility in a complex supply chain system, it’s important to realize that it’s not a singular supply chain issue that arises in the face of breakdown, rather a systemic, rippling impact that can have unforeseen consequences. This, too, is another arena in which well-structured and complete data can be of immense benefit to decision-makers.
How To Plan for Supply Chain Disruption
Some things in life are nearly impossible to plan for, but supply chain disruptions are simply a fact of life in the business world so it’s best to be prepared for, not if, but when it happens. In some dire or unexpected scenarios, operations may come to a halt, but even in these instances, preparation can make all the difference in how quickly a business can repair supply chain issues.
In the best-case scenario, early preparation may prevent delays and interruptions entirely.
Create a supply chain emergency plan
Just as it is wise to have a go-bag at home in case of emergency, a family plan in case of fire, and a winter supplies bag in the car for icy situations, it is equally wise to maintain an up-to-date supply chain emergency plan.
This can include an emergency budget for use in the face of disruptions alongside plans around how to move goods around, maintain supplies, and continue operations in the face of different types of supply chain problems.
Build up inventory
If your business relies heavily on certain inventory to continue operations, consider stockpiling essential supplies so that your business could weather disruption that endures for several months.
Conduct a supply chain vulnerability audit
Risk analysis is a good way to spot weak links in a supply chain, and is something businesses should engage in seriously and regularly. Armed with information, finding replacements becomes a more straightforward task in terms of priority.
Identify backup suppliers
Are there other suppliers that could provide the products needed to continue business if a go-to supplier is not able to fulfill supply needs? One important factor to consider when seeking out backup suppliers is their geographic location. If your original supplier is hit with a natural disaster or similar issue, having suppliers who are further away from the event site can help guarantee continued supply.
Diversify supply base
As mentioned above, diversification of suppliers helps mitigate risk just as a diversified investment portfolio does. Geographic diversification is critical, but another important factor to consider is further up the supply chain. Even if three of your suppliers are in different areas, they may share a supplier amongst them which could leave all three in the wake of disruption. Diversify in as many areas as possible and begin to build relationships with these suppliers well ahead of potential disruptions.
Partner with a logistics expert
Fulfillment and supply chain experts are trained to support businesses that are facing disruption. These experts can offer guidance on how to locate courier services, manage fees, and continue to move forward when faced with disruption. The more experienced support available to you in times of crisis and supply chain issues, the better prepared your business will be.
Adopt risk evaluation tools
Risk analysis has evolved from the decades leading up to now. With good data sources, AI and machine learning can be used to understand and calculate supply chain risks. Additionally, these sorts of risk evaluation tools can help analyze solutions as well. By using predictive methods, businesses can gain deeper insights into potential threats including geopolitical issues and cyber threats using data from a wide variety of sources including proprietary collection and open sources such as social media.
These types of tools can evaluate more quickly, even in real-time, and at a much greater depth than any human analyst (or team thereof).
Supply chain disruptions are bound to happen in our existing complex and imperfect systems. Data silos among ports, government regulations, disasters, pandemics only scratch the surface of what can go wrong in this immense system the global consumers have come to rely upon. However, with a supply chain disruption emergency plan, the right expertise, valuable and up-to-date data sources, regular risk assessments including those performed by AI or machine learning analysis tools, and diversification, businesses can much more easily weather any disruption.
Tools that foster deep inventory awareness and automation save costs and provide valuable information. ShipWorks provides automation services for high-volume shippers using AI and years of industry expertise, saving time and money all the while reducing risk.