Due to recent disruptions to the global economy, more organizations prioritize supply chain resilience and making changes resulting from pandemic outbreaks to mitigate future risks. Still, supply chain stress levels remain significantly higher than before the pandemic, with cyberattacks, harsh weather, labor shortages, transportation bottlenecks, inflation, and pandemic issues compounding and exacerbating existing problems, plus unpredictable market demand further compounding all this stress.
What Is A Supply Chain Disruption?
Supply chains consist of the network of individuals and businesses involved in producing and delivering goods directly to consumers. In contrast, any situation that prevents a company from producing, selling, and distributing its goods is considered supply chain disruption. Supply chain disruption can seriously jeopardize business operations by delaying shipments, decreasing product quality, raising expenses, or hurting its reputation - making supply chain management increasingly complex with every disruption occurring along its path.
Issues with supply chains can have devastating repercussions for businesses, often crippling their effectiveness altogether. Companies can implement various techniques to manage supply chain risks and mitigate interruptions, including setting up backup supplier arrangements, moving supply lines geographically, or building inventories to lower risks and lessen interruption effects. Digital technologies further augment these strategies by improving supplier networking visibility and analytic capabilities, enabling businesses to monitor supply chains closely for potential problems and develop contingency plans before costly headaches arise.
8 Tips For Navigating Supply Chain Disruption
Enhance The Visibility Of The Supply Chain
Maintaining a network of suppliers and guaranteeing the steady flow of parts and materials are necessary to weather an interruption in the supply chain. For this reason, openness and visibility must be prioritized.
Working Methodologies That Are Innovative And Promising
Optimize business operations to increase profits, decrease overhead costs, and gain a competitive advantage. Supply mapping gives executives a deeper understanding of their supply chains' operations - one way of increasing visibility into these processes.
Ascertaining what each plant produces and its location is also vitally important. Understanding the components that must be available as essential replacements and those available elsewhere is equally vital in meeting each unit's operational state and inventory needs, which is also paramount to its success.
An ERP could be necessary to store all this information in one convenient place. ERPs offer real-time inventory control and business analytics for early problem identification.
Strengthen Cooperation Within
Staying afloat during a supply chain outage will be much more complicated if your teams operate independently. Cooperation among departments is paramount during such an emergency.
Your sales team should have direct access to project managers through your customer support department, creating and preventing conflict through collaboration among all stakeholders.
ERP systems can assist with cross-functional workforce collaboration by ensuring all team members use the same dataset. Your teams may work together to identify patterns, predict issues, and head them off before they arise.
Estimate Need
As soon as a crisis hits, demand must always be closely watched and assessed to avoid fluctuations that could threaten to create chaos in an instant. Keep an eye out for emerging trends or customer behavior changes as you assess demand - such as flocking to toilet paper aisles or stockpiling paper towels. In these instances, analyzing demand helps adjust inventory levels in response to these sudden shifts by analyzing supply-and-demand relationships.
Demand growth may help some merchants increase revenue, but it also places strain on manufacturers who cannot quickly fill orders. This is particularly evident in healthcare production facilities in America that cannot keep pace with daily spikes in face mask demand.
On the other hand, some industries are adapting to an industry decline by producing ventilators (and helping save lives). Automakers, for instance, are producing ventilators to combat the market decline in automobile sales.
Demand forecasting allows automakers to respond swiftly and flexibly to changing market conditions. Automakers typically utilize ERP software that meets a range of production needs for this process.
Seek Out Additional Suppliers
Are you reliant on an international supply network of suppliers located all around the globe for your business? Disruptions to this supply network may arise due to circumstances beyond your control, often leading to unexpected disruptions.
Dependence on just one provider can increase risk. To ensure business continuity in an emergency, have an additional source in reserve at all times.Though this approach promotes resilience and stability within your supply chain, there may be costs. While not always cost-effective, using new vendors or various outsourcing techniques may sometimes be the optimal course of action.
Establish An Omnichannel Distribution Investment
How does your business currently enable customers to order and acquire its products? Your firm may be experiencing more harm from the coronavirus outbreak if it relies solely on foot traffic at physical locations. Your store could be missing out on significant sales opportunities by not having an online presence, not to mention making itself more vulnerable whenever disruption alters customer behavior significantly.
Many physical restaurants have expanded their menus by including takeaway or supermarket options online to keep pace with changing patron needs and stay in business.
Strive To Keep Your Staff
As the global economy adjusts to a new normal, unemployment is on an unprecedented surge. While reducing your team to the absolute minimum level might seem prudent, this might not always be in your best interests.
Now is an opportune time to focus on employee retention. Knowledgeable personnel must be on hand and available should your supply chain face an emergency. Furthermore, hiring specific staff could help your business plan adapt. Do you remember eateries offering takeaway menus? In these instances, servers often include "delivery driver" as an additional job title on their applications to show they remain employed.
Assess Your Financial Situation
Financial stress testing was once limited to banks alone; today, it can be used by any business for risk evaluation purposes.
Risk analysis involves measuring short-term and ongoing threats to your company, for instance, in supply chain sectors where many rules and regulations must be observed. What would happen if any violations were discovered?
Model potential risks to your organization and how your organization could respond before discussing with stakeholders how you will mitigate and respond.
Increase Client Involvement
Even when your supply chain control mechanisms are entirely reversed, customer involvement cannot be ignored. Your clients are the lifeblood of your business!
Consistent communication is vital. Now is the time to ensure your brand is present on social media, interacting with fans regularly. To build buzz for your product or service, publishing educational blogs, hosting events, offering discount codes, or posing pertinent queries is also vital in creating awareness.
An organization with happy, engaged customers tends to be more resilient when facing unanticipated events. With that in mind, consider investing in customer experience transformation.
How To Handle Supply Chain Disruptions
Following are the best practices for creating and running resilient supply chain disruption:
Assess Any Risk Variables
Supply chain managers can start organizing themselves by classifying and eliminating known hazards and then developing a system to handle disruptions to supply chains. Traditional supply chain risks are more accessible to quantify and monitor than less common disruption sources like supplier bankruptcies; using their financial history or product lines dependent upon them for risk evaluation is possible; alternatively, some unidentified hazards could include shifting targets.
Strategize For Contingencies
Supply chain operations must be flexible in an environment prone to risks. A contingency plan might include strategies such as alternate supplier relationships. Short and long-term measures that address issues when they do arise while prioritizing operations that need immediate attention, rebalancing inventory, shifting orders between vendors, informing relevant parties of plans as they unfold - and regular reviews/updates may make sure your contingency plans work when you most need them.
Monitor And Assess Data From Your Supply Chain
Supply chain processes run more smoothly when there is visibility. PwC polled business professionals who selected IoT and cloud computing as two technologies that have significantly increased visibility in modern life.
Businesses use digital tools, like scanners, to extract tracking and maintenance data for analysis from the Internet of Things devices in vehicles, warehouses, and factories. Cloud networks then store this data.
Leverage Automation Tools To Manage Interruptions More Effectively
Businesses that closely watch every stage of the supply chain process can increase productivity while cutting expenses. Sensors in warehouses can monitor stock levels to prevent stockouts; when reaching certain thresholds, these sensors automatically place new orders for supplies when stock runs low. Sensors also show the location and state of items while in transit so companies can redirect orders immediately in the event of delays or redirect in case an issue arises.
Robotic process automation in the back office can help avoid ordering issues by eliminating errors associated with manual data entry. AI is being utilized by many businesses to enhance automated processes like product reordering and routing. Some are even utilizing robots to select items off shelves and load shipments directly into warehouses due to labor shortages - certain cities are even testing drone deliveries.
Strengthen Supplier Relations
As indicated in a recent poll from Gartner, suppliers should be seen more as partners in preventing interruptions than as potential sources of risk. 77% of chief supply chain officers attempting to strengthen cooperative ties between essential suppliers and customers according to this trend were making efforts to guarantee supply, shorten lead times, and reduce risks via inventory-hedging techniques; several businesses are creating unique inventory-hedging techniques; others have found success forming connections with a diverse array of suppliers such as women- and minority-owned firms that offer fresh perspectives regarding agility and resilience when facing challenges head-on.
Also Read: Optimize Procurement: Advanced Forecasting for Supply Chain Success
Steps To Take To Resolve Supply Chain Disruptions
Supply chain disruptions often happen unexpectedly, yet with proactive plans to reduce disruption, businesses may better prepare for such events in advance. Four supply chain risk management techniques are worth including in any business plan.
Build Backup Inventory
Assess Your Stock Holdings Carefully assess your stock holdings to ascertain how much safety stock to keep on hand if your supply chain becomes disrupted or delayed, then plan accordingly. What Is a Safety Stock? A set quantity of specific goods is held back as safety stock to help avoid stockouts during periods of intense demand; an out-of-stock order negatively affects customers' trust as well as immediate sales, thus creating an unpleasant shopping experience that leaves customers wanting.
Increase Supplier Variety
Manufacturers and merchants are considering diversifying their suppliers after the pandemic economy has hit hard. Businesses with goods entangled in foreign supply chains found that depending solely on one supplier restricted their flexibility. When pandemic-related delays lasted longer than predicted, businesses scrambled for solutions; having backup providers could help lessen any future difficulties.
Trust Partners For Fulfillment
Fulfillment experts are prepared to manage any interruptions in the supply chain. At Flowspace, our rapid, cost-effective, and flexible order fulfillment solutions give companies complete visibility of their inventory, orders, and customer data.
We assist companies in making strategic adjustments in response to unexpected supply chain disruptions to better serve their clients. Customers may take immediate action regardless of climate by having real-time transparency, better identifying possible dangers, and an independent fulfillment network connected by software.
Interact With Clients
Customers expect deliveries to be on time regardless of what's happening behind the scenes or any disruptions in supply chains. Anytime there is an inventory shortage caused by such disruptions, customers should be informed immediately. Offer alternative supply arrangements as necessary and give as much detail as possible about how issues will be rectified and when they should expect the issue to be remedied.
Optimizing Supply Chain Management For The Future
How can businesses prepare themselves for inevitable supply disruptions? Below are several strategies for mitigating adverse effects and taking proactive measures to plan.
Increase Inventory Visibility Now
Assimilate information that's accurate and timely to anticipate supplier shortages. Businesses connected via Flowspace technology to one central command center can view inventory at any location in real time; leaders have enough time to make critical decisions based on accurate, up-to-date information.
Production Should Be Your Top Priority
When there is an interruption in the supply chain or a lack of materials, some items become more essential than before. Sort things into appropriate categories so operations continue uninterrupted even though complete inventory alternatives may temporarily become scarcer. Consider the pros and cons of shortening timetables during such incidents so shipments don't stop altogether; prioritizing vital products first can reduce stockout risk while providing temporary backup plans can keep sales stable.
Evaluate Other Logistics
There are many logistic issues due to rising freight costs, port congestion, and truck driver shortages. If the client demands changes, Flowspace can assist in finding alternate shipping solutions with cost savings in mind and on-time deliveries guaranteed - our order fulfillment services use network optimization algorithms that determine which warehouse is nearest your customer base for optimal order fulfillment services.
Assess Market
Following any significant disruption in supply chain operations, it's wise to assess market demand and any possible shifts. Due to the pandemic's effect, businesses closed physical storefronts, leading to an explosion of online ordering from consumers who now increasingly rely on technology when shopping.
Conclusion
Disruptions to supply chains can devastate companies, leading to delays, higher expenses, and reduced sales. Businesses can mitigate their effects by implementing more robust inventory management procedures and safeguarding their bottom lines.
Enhancing inventory management requires increasing inventory levels, devising an emergency plan, and diversifying their supply chains. Businesses can use technology like inventory management software to monitor inventories in real-time and respond immediately when any problems arise; such software enables companies to recognize disruptions quickly.
