Supply chain disruption is more than just an inconvenience for businesses, it impacts consumer demand, production capacity, and economic growth. When supply chains are disrupted, it takes time and money to recover, delay customer delivery dates, and may impact product quality due to rushed production processes. It can also damage brand reputation and lead to lost business with customers.
Disruptions can occur at a number of levels and are often driven by uncontrollable events. A natural disaster like a flood or earthquake can damage facilities, and reduce production and shipping capacity. A geopolitical move like Brexit can also have implications on how manufacturers source, transport, assemble, price their products and make them consumer-available. Even a flu pandemic can cause factories to stop production, while affecting consumers’ purchasing behavior.
There are many ways companies can prepare for supply chain disruption. For example, they can audit available inventory, and consider adjusting their safety stock strategy to a mixed model of just-in-time (JIT) inventory with a buffer of just-in-case inventory. This approach allows businesses to minimize costs by reducing the amount of stock they have on hand, yet maintains the ability to respond quickly when a disruption occurs.
Another way to improve supply chain resilience is to partner with a group purchasing organization that can help save you money on your supplies while providing access to valuable resources like advice and negotiating power during a scarcity. But the most important strategy is to focus on being agile and resilient, by assessing risk factors, taking contingency planning to the next level, and fostering resilience in the face of the unpredictable.
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