Supply chain disruptions as a whole increased by 14% between 2019 and 2020. Few things may stand in the way of your products getting to consumers on time. It could be due to labor strikes, picket lines, or power outages.
Other disruptions can be due to a fire or weather event that happened to your manufacturing or supply chain facilities. Sometimes, natural disasters don’t only affect the manufacturing facilities but also the warehouses, distribution centers, and retail outlets.
No matter what the problem, your business needs to be prepared. Here are some steps to manage supply chain challenges.
Have a Contingency Plan
The first and most crucial step your business can take to manage supply chain disruptions is to have a contingency plan. This plan should identify the key suppliers that your business depends on and have alternate suppliers lined up in case of trouble.
It is also essential to have an inventory management plan in place so that you can adjust your production levels accordingly if there are issues in your supply chain. By having a contingency plan in place, your business can minimize the impact of supply chain challenges and keep your operations running smoothly.
Build Up Inventory
By understanding where your business is vulnerable, you can take steps to mitigate the risks. Another way to reduce the risk of supply chain disruptions is to build up an inventory of key components. This way, if there is a disruption in the supply chain, you will have components on hand to keep your business running.
Building up the inventory can be expensive. It is important to strike a balance between the cost of holding stocks and the cost of a supply chain disruption.
Diversify Your Suppliers
If you rely on a single supplier for a key component, you are at risk of a supply chain disruption if that supplier experiences a problem. To reduce this risk, you can source that component from multiple suppliers. Diversifying your supplier base can protect your business from supply chain problems caused by supplier issues.
You surely don’t want to frustrate your customers because of a stockout. Read an article on stockouts to know how you can avoid them.
Foster Good Relationships with Your Suppliers
Maintaining good communication and a positive relationship with your suppliers is essential. With this, you will be able to work together to overcome any disruptions that may occur. By having a solid relationship with your suppliers, you can also negotiate better contracts that protect your business in the event of a supply chain problem.
Invest in Technology
Tracking data and utilizing forecasting tools can help businesses predict interruptions and avoid them. A software for managing inventory and supply levels will ensure that your business is always prepared.
By investing in technology, you can keep your supply chains running smoothly and avoid costly disruptions.
Reduce the Risk of Supply Chain Disruptions
In order to manage supply chain disruptions, your business must be proactive and have a plan in place. Supply chain disruptions can come from a variety of sources.
Be prepared for any eventuality. Having a plan in place will help your business to minimize the impact of disruptions and keep your supply chain running satisfactorily.
Check out our other blog posts if you wish to learn more about supply chain management and other related topics.