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August 15, 2022

Experiencing Supply Chain Delays? Here's How to Mitigate Disruptions

supply chain disruption-2

When you're experiencing supply chain delays or disruptions, it's easy to feel stuck. Unexpected challenges can cause expensive and disastrous issues for your company. So, what can you do to prepare?

This blog will discuss supply chain delays and five ways you can mitigate disruptions.

The Reality of Supply Chain Delays

The disruptions impacting the supply chain are the worst we've seen in 50 years. The supply chain was initially interrupted by the unexpected onset of COVID-19 and further compounded by increased consumer demand, political issues, and worker shortages. Lockdowns and shuttered facilities created a backlog of supplies while consumer behavior changed, focusing on items like home gym equipment and groceries over beauty supplies and travel.

Many consumers also switched to making online purchases during the pandemic. Direct-to-customer (DTC) shopping added further stress to the supply chain by increasing the frequency and complexity of last-mile delivery.

Economists and industry experts are split on whether the current inflation and slowing demand could lead to a recession. Regardless of what's ahead, businesses should prepare for a volatile supply chain and uncertain economy.

Five Ways to Mitigate Supply Chain Disruption

There is no question that the road ahead will include events you won't see coming, so it's important to prepare for likely disruptions. An agile strategy increases resiliency, allowing you to pivot as trends or needs change.

Here are five ways you can prepare for future supply chain disruptions.

Audit for Supply Chain Vulnerability

Do you know where the weakest points are in your supply chain? Understanding points of increased risk helps you create more accurate contingency plans.

To conduct an audit of your supply chain, established standardized criteria with measurable key performance indicators (KPIs). Areas of risk and vulnerability might include:

  • Inventory
  • Pricing
  • Reputation
  • Contracts
  • Geopolitics
  • Cybersecurity
  • Transportation
  • Compliance
  • Records
  • Goods

Check your current process by examining your records and assessing current workflows. Consider where you might be at increased risk because of lacking oversight or safeguards. You can ask suppliers, vendors, and partners to conduct self-assessments to prepare for onsite evaluations. 

After your onsite audit, follow up with communication about your findings and plans for mitigating risk. Establish annual or semi-annual audits to continually reassess each point in your supply chain.

Create a Contingency Plan for Emergencies

It's important to anticipate potential risks and plan for a wide range of possible scenarios. There isn't a question of whether or not an event will occur — just a question of when and what. Establish contingency plans for every kind of disruptive event so you are prepared with a response.

Structure a supply chain strategy that is agile and customer-centric. Prepare solutions and responses to address every kind of problem that could disrupt operations. Use data-driven forecasting to help identify what scenarios present the greatest risk and should hold the highest priority at any given time.

During any time of plenty or calm, prepare for times of lean margins or unexpected events. Set aside an emergency fund to use if things get tight.

Identify Backup Suppliers and Diversify

Supply chains are weaker when certain points become too important. Ideally, you will have multiple suppliers who can provide the goods you need to continue if another vendor runs into a problem.

Shortening the supply chain by choosing local suppliers can eliminate risks due to geopolitical issues, travel problems, customs holdups, port backlogs, and more. Establish a few primary suppliers and then build relationships with backup options so you can switch if a problem occurs at any point.

Make sure you understand the inevitable delay of switching lead suppliers. Most providers won't be able to meet production requirements immediately and will need time to ramp up. You might be able to reduce capacity with your primary supplier and take on a backup supplier to gradually transition to a diversified solution. Using several smaller contracts typically means less risk than relying on a single distributor.

Build Up an Existing Inventory

Use modern inventory management software to get real-time insights on your current levels for storage, kitting, and shipping. Build up excess inventory where possible to create a buffer in case shortages occur.

With better insights into your inventory, you can accurately predict inventory turnover with data-driven demand forecasting. Determine a safety stock that will help you bridge any unexpected material shortage or increase in demand.

You must establish the right amount of on-hand inventory to avoid excessive storage fees or turnover rates passing the ideal shelf life. At the same time, you want to build up enough on-hand inventory to avoid stockouts and frustrated buyers.

One formula to quickly calculate a starting safety stock: (maximum daily product turnover x maximum days of lead time) - (average daily product turnover x average days of lead time).

Improve Supply Chain Transparency

Data will help you gain insights into your supply chain if it is collected and used correctly. However, unorganized data can bog down your team and provide a tangled mess of information that doesn't provide any clarity.

With the right tracking and software in place, you can increase transparency in the supply chain. Insights should help you see what is happening in real-time and help you predict future trends.

For example, better tracking of shipped products can help avoid damage due to mishandling or loss because of misplacement. And clearer insights on weather and traffic can help you choose the best modality and route for on-time deliveries.

Plus, increased transparency can help inform your supply chain partners and customers. Better communication builds stronger relationships and increases trust. You can improve your brand reputation by offering clarity in the logistics process.

Strengthen Your Supply Chain with Materialogic

Choosing the right 3PL partner might mean the difference between powerful insights that keep you ahead of the game or playing catchup after disruptive events. A great logistics partner can help you create a highly optimized supply chain with better connections and visibility.

At Materialogic, we start by learning about your unique supply chain setup, industry challenges, and business goals. We'll then provide an assessment to identify where automation or forecasting can improve your processes. You'll have access to modern software and expert support every step of the way.

Are you ready to strengthen your supply chain? We can help you meet unexpected challenges head-on and pursue new opportunities as they come up. Reach out to our team today to get started.

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