If you’ve been keeping an eye on the news, you’ve likely heard about the threat to supply chains on October 1st. Unions working the U.S. East Coast and Gulf Coast ports are planning a strike that could severely affect supply chains across industries.
Combine that with the peak holiday season, hurricane threats, and China’s National Day holiday, and it’s a perfect storm for disruption. This mirrors the Pandemic-era supply chain crisis, reminding us why it’s more important than ever to build a disaster-proof strategy.
But how can business create a disaster proof supply chain? And what benefits does it hold?
Diversify Your Supplier Base
One of the biggest risks businesses face is relying too heavily on a single supplier or geographic location. When you depend on just one source, any disruption—whether a natural disaster, political instability, or unexpected closures—can halt your operations. This situation is known as a single point of failure, and a major vulnerability in supply chain management.
Moreover, customers are becoming used to instant services and a lag can fail their trust. By diversifying supplier base, businesses can spread risk across multiple regions and suppliers. In a case where one line of supply is disrupted, others remain operational, increasing resilience and business continuity, even in the face of unexpected challenges.
Real-Life Example: In 2011, the Fukushima earthquake and tsunami in Japan disrupted the global supply of everything from car parts to electronics. Companies relying heavily on Japanese suppliers were hit the hardest, with some facing months of delays.
Build Safety Stock and Inventory Buffers
The concept of safety stock is especially important for industries where demand is unpredictable, or lead times are lengthy. WIth a safety buffer in place, businesses can avoid costly delays, stockouts, and dissatisfied customers.
It’s like a form of insurance that protects against the risk of being caught off guard by unforeseen supply chain issues. But don’t just stock without some considerations or it might lead to a waste. Better still, you could the following factors below into consideration and do a calculations to see which safety stock is optimal for your business:
- Lead Time: How long it takes for suppliers to deliver goods after placing an order.
- Demand Variability: Fluctuations in demand over time.
- Service Level: The desired probability of not running out of stock.
For instance, if your supplier typically takes 14 days to deliver and demand can fluctuate by 20%, your safety stock needs to account for both the time and variability to ensure you have enough inventory to meet customer needs during that period.
Leverage Technology and Data
Thanks to technology, we now have more access to data than ever, ranging from AI and predictive analytics tools like Tableau, IBM Watson amongst others. By harnessing the power of these data insights, businesses can anticipate issues before they arise, making their supply chains more resilient and adaptable.
There are also supply chain management systems like SAP Integrated Business Planning (IBP) and Oracle SCM Cloud, which provide real-time insights into inventory levels, order status, and supplier reliability. Instead of manually handling all these activities, businesses can rely on these advanced tools, empowering them to make quick, informed decisions and avoid costly disruptions.
Strengthen Supplier Relationships
In times of crisis, strong relationships with suppliers can make all the difference. Suppliers who value their relationship with your business are more likely to offer faster responses and priority access to goods during shortages or delays, ensuring your operations remain on track.
Frequent and transparent communication is also key. First, seek to understand your suppliers’ challenges—whether it’s material shortages, transportation issues, etc.—and you can work together to develop contingency plans, reducing the chances of downtime.
At International Supply Partners (ISP), we thrive on relationships. We build long-term partnerships with our clients by offering ongoing support, not just in stable times but also during emergencies. Thanks to our flexibility and commitment, we ensure that our clients always have what they need when it matters most.
Develop a Contingency Plan
A detailed contingency plan is necessary because no business is entirely risk averse. With a contingency plan, there are outlined steps to take during a disruption to experience minimal or even zoro operations interruption.
That said, A well-structured contingency plan should cover multiple worst-case scenarios. For example, It could include strategies like shifting suppliers when there are shortages, increasing production in advance of known risks, or identifying alternative transport routes when the primary routes are compromised.
Developing a plan is only the first step, training employees on what to do during a crisis is equally important. With regular training sessions and simulation exercises, employees understand their roles and responsibilities during disruptions, allowing them to react effectively and minimize downtime. The training should equally be revisited and updated regularly to account for business changes.
Conclusion
In today’s unpredictable business climate, building a disaster-proof supply chain is a necessity for businesses to stay resilient. By following the steps outlined above, companies can proactively prepare and create a supply chain that handles unexpected challenges while ensuring customer satisfaction.
At International Supply Partners (ISP), we are committed to helping businesses maintain stability by providing reliable, compliant supplies and customized solutions for different industries. Remember, in the face of uncertainty, preparation and adaptability are your strongest assets—and with ISP as your partner, you are never facing challenges alone.