It has been a difficult year for many individuals, entrepreneurs and organisations who have been struggling to keep afloat throughout the global pandemic and various lockdowns brought about by Covid-19.
Despite lockdowns now lifting, supply chain disruption continues to make headlines and is proving challenging to all types of business – from small family businesses to multinational corporations. With foresight and planning however, this disruption can be managed and the worst effects mitigated against.
Why is a supply chain disruption a problem?
With cargo ships being delayed across the globe and Christmas sales being brought forward to compensate for potential shortages, it is clear that companies need to find ways to mitigate the risk of supply chain disruptions. These are problematic because they can stop a company from obtaining stock, components or supplies that are vital to their business.
An example of why we are currently faced with this challenge comes from Taiwan which, we’ve learnt in recent weeks, produces more than half of the global supply of computer chips. If supply lines to and from Taiwan are disrupted therefore, so is the global tech sector. This in turn stopped the production of new cars, new computers and a host of other products that relied on computer chips.
So, what steps can businesses take to combat supply chain disruption? Below we outline some of the core strategies businesses and entire countries can consider when facing this problem.
Invest in technology to support your supply chain
Technology can empower businesses to be more dynamic and hands-on with their suppliers, customers and inventory management. This, in turn, allows them to be more proactive and aware of upcoming issues across the supply chain.
For example, inventory management software offers real-time information and inventory control as well as supply chain management to all kinds of businesses. This helps companies plan and prepare for any drops in supplies.
Diversify your suppliers
There are many good reasons to diversify your supply chain, one of which is that it helps mitigate against the risk of supply chain disruption. It can be a wise decision to use multiple suppliers so that if something does go wrong, you will have other reputable suppliers that you can turn to. There are other upsides to having a diverse list of suppliers too, such as being able to ensure the price you’re being offered is competitive.
Bring risk management into your supply chain management
Effective supply chain management ensures the consistent flow of goods, components and materials across a supply chain. Incorporating a supply chain risk matrix that allows you to assess the chance of disruption and offers more time to react to the problem.
Talk to suppliers about risk planning
While there are some tech fixes when it comes to supply chain risk management, the old fashioned approach of just talking to people should also be part of your strategy.
Your suppliers can provide unique insights into the supply chain and help you identify areas of concern and come up with solutions so speaking on a regular basis can yield some great intelligence that will help you stay ahead of the curve. Maintaining this relationship also keeps you on the same page as the supplier, allowing you to work together to implement measures that will protect your business from supply chain disruption.
There are lots of methods that you can use to protect your company from supply chain disruption. Whether that is upgrading your supply chain management software or diversifying your suppliers, it is important to have plans in place to safeguard your business from supply chain disruptions.