Six Common Disruptions in the Supply Chain (and How to Prepare for Them)
When you run a business, disruptions to your supply chain can be difficult and costly to deal with, especially when they are unexpected. Not only can supply disruptions affect your bottom line and your business goals, but they can also impact customer experience and satisfaction. Some companies spend innumerable dollars and work hours on supply chain risk management (SCRM) strategies in an attempt to avoid or preempt any possible disruptions. While you can’t always anticipate these disruptions, you can make sure your business is prepared to deal with them so their effects aren’t as devastating. Below are some common supply chain disruptions and some resources and tactics for handling them as efficiently as possible.
1. TECHNOLOGICAL TRENDS AND DEVELOPMENTS
We are living in a digital age, which means that technology is not only a big part of our personal lives, but our work lives as well. The integration of technology into your business — such as switching from Excel spreadsheets to new inventory management software, or automating traditionally manual processes, like work orders and billing — can affect your supply chain. While these shifts tend to be positive and promise efficiency, they can still be disruptive to both workflow and supply. As companies and employees adapt to new technology that may ultimately make them more productive, the transition period can cause short-term drops in productivity. To mitigate these disruptions, you can hold training sessions for staff before implementation, which will give employees working with new technology an edge when the new process becomes standard.
2. TRANSPORTATION AND STORAGE
Transportation and storage impact virtually every part of your supply chain — from sourcing raw materials, storing products either in-store or off-site, to delivering finished products to customers. But what you may not realize is that ineffective transportation and storage can be costing you a lot of money. Ineffective storage can decrease the shelf-life of products, and even cause damage to them in some cases. Ineffective transportation can drive up monthly fuel costs and extend delivery times, which can lower customer satisfaction. To optimize your storage and transportation methods, you can:
- Invest in temperature or humidity control for your storage unit
- Research the most direct routes for delivery
- Increase your storage space
- Deliver in smaller batches — lighter loads will use less fuel
Not only can optimizing your transportation and storage methods save you some money, but it can also cut down on your carbon footprint by consuming less fuel and cutting down on travel times.
3. NATURAL DISASTERS AND WEATHER
Natural disasters, weather delays, and other environmental factors are a big part of SCRM, and can cause serious problems for many business owners. Extreme weather can affect the production of raw materials, the ability to transport goods or deliver finished products, and, in some cases, even decommission production facilities or storefronts. While you may not be able to control it, there are ways that you can prepare your business for success no matter the weather. If you’re living in an area with regular extreme weather — such as a coastal city — you may want to invest in an emergency kit or business interruption insurance.
Cyberattacks — also called supply chain attacks — can have calamitous consequences for your supply chain and business success. Due to a rise in cybersecurity and awareness as businesses make the shift toward automation, cyberattackers are relying on installing malware in the building blocks of supply chain code, according to Check Point Research. This derails the chain's main function and can bring business to a complete halt. You can protect yourself against malware by running frequent audits on your systems, and by prioritizing prevention rather than reparation.
5. GOVERNMENTAL REGULATIONS
All governmental regulations, from local policies to federal legislation, can impact the supply chain at several levels, including:
- The purchasing of raw materials
- Means of production and manufacturing
- Product standards
- Means of selling and distribution
Even other countries’ local and national laws can affect your supply chain, depending on the scope of your product reach. Because of the numerous specifications that can affect your supply chain, it is important that you stay up to date regarding local, national, and international politics. For U.S.-based businesses, the Federal Trade Commission (FTC) will be one of your primary resources.
6. PRICE FLUCTUATIONS
Fluctuating prices — especially price increases — can be hard to deal with as both a consumer and a business. Forces like inflation or recession not only affect the consumer’s market, but the supply chain for many businesses. Not being able to properly assess business costs due to a volatile market, or being priced out of manufacturing needs are serious threats to many businesses. And while you may not be able to stop price fluctuations, you can strategize to mitigate them. You can do this by:
- Understanding the global market, not just local trends
- Buying in bulk when feasible
- Investing in lower risk or historically “stable” markets
Supply chain disruptions can be seriously costly for business owners, but they do not have to cause permanent damage. With the tools listed above, you can reduce the damage done by common supply chain disruptions, and plan more effectively for the future.
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