The COVID-19 pandemic caused supply chain problems for 75% of businesses across the United States, and 57% experienced longer lead times for orders. That’s why your business needs to begin preparing for future supply chain disruptions now. Let’s look at six ways to get started.
[Read more: How Big Brands Are Re-Thinking Supply Chain and Fulfillment]
Conduct a vulnerability assessment
Threats to the supply chain are inevitable, and it’s only a matter of when—not if—your business is affected. So the first step is to assess your business to see where it’s vulnerable to supply chain disruptions. Evaluate each step in the supply chain process, including your suppliers, warehouses and delivery routes.
You can do supplier mapping to learn more about how your supply chain works. Outline each plant location and what happens at each one. Doing this will help you determine areas of weakness and begin to come up with alternative solutions.
Have a plan in place
Once you know where your business is vulnerable, you develop a contingency plan for supply chain disruption. As a business owner, you need to know:
- What your business can do if major supply chains are disrupted.
- What a supply chain disruption will mean for your bottom line and financial situation.
- How long you can last without cutting back on standard services.
- What you need to prioritize going forward.
Once you’ve answered these questions, you can come up with a contingency plan to create additional vendor relationships. You can also begin stocking up on crucial supplies and preparing an emergency budget.
In many cases, your vendors may be able to warn you about supply chain disruptions.
Build multiple vendor relationships
It’s a good idea to establish relationships with multiple vendors instead of just one. You can think of it in the same way as diversifying your income streams—if one vendor relationship goes south, you have other vendors to fall back on.
Diversifying can help you maintain supply lines and protect your relationship with your customers. If you work primarily with one vendor, start drawing up deals with secondary suppliers. By obtaining products from multiple sources, your business will be more resilient to disruption.
[Read more: How to Negotiate a Better Vendor Contract]
Have communication policies in place
It’s also a good idea to have clear communication policies in place. Maintain communication with supply chain managers so you can anticipate upcoming disruptions quickly and place orders to compensate.
In many cases, your vendors may be able to warn you about supply chain disruptions. The more warning you have, the faster you’ll be able to decide whether to order additional products or begin rationing the supplies you have on hand.
In addition, practice communicating clearly with your stakeholders and customers. They need to know immediately about supply chain problems, and what you’re doing to manage the situation. Transparency is always better than trying to hide the reality of a supply chain problem.
[Read more: How to Best Communicate Change to Your Employees]
Build up extra supplies over time
You can also protect your business from a potential supply chain disruption by stocking up on necessary items over time. Stocking up means you’ll need extra storage space, but it can pay off in dividends down the road. By having a stockpile of essential items, your business may be able to get through several months of disruption.
Invest in the right technology
It’s essential to invest in technology to create more visibility in your supply chain process. For instance, inventory management software will show you:
- What inventory you currently have in stock.
- What items you have on order.
- The performance of various suppliers.
Knowing your business’s current inventory levels could help you avoid disruption in the future.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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