The global pandemic has interrupted business operations worldwide, a harsh reality everyone has had to grow accustomed to. Besides lack of demand, lockdowns in countries led to disruptions in the supply chain. Companies using imported raw materials faced production delays, whereas enterprises engaging in cross-border trade experienced delivery delays. All in all, the supply chain function has been affected severely due to the pandemic.
As economies restart in 2022, leaders must take immediate actions to sustain supply chain operations to serve their customers. Businesses have to build long-term resilience in their value chain for tackling future challenges. Entrepreneurs have to follow a holistic approach to managing the supply chain. Perhaps, you can diversify the network of suppliers to reduce production risk.
Likewise, you can leverage platforms supporting artificial intelligence and machine learning. Having end-to-end transparency across the supply chain network will make operations more resilient and responsive. If you don’t have much experience in supply chain planning, let us show you the ropes. Here we are highlighting five ways to navigate supply chain disruptions.
- Adopt Risk Evaluation Tools
Previously, organizations had a team for assessing supply chain risks, but now, you can deploy tools for this task. For example, AI-enabled mapping and environmental analysis solutions allow businesses to evaluate potential threats to their supply chain. In addition, companies with an extensive supply chain network can aggregate apps to provide geopolitical overviews.
It is understandable that navigating these software solutions and apps is not everyone’s cup of tea. Therefore, you have to find experts with expertise, knowledge, and skills. One way to do that is by hiring experienced and well-educated employees or encouraging your current employees to study further. For example, ask them to google keywords like “MBA supply chain management” or “masters supply chain management” to further their studies. It would help them get well-versed in potential shortages and disruptions.
- Communicate with Customers
Is your shipment facing unforeseen delays? If so, be transparent to your customers. Unfortunately, many companies keep their customers in the dark and stop responding to them. Alongside putting the brand’s reputation at stake, it makes the customers angry. Therefore, you have to be upfront about the delays and give proper reasoning; only then will the customers understand.
For this, you need a solid and experienced support team that updates every customer proactively. The support team will seek updates from the suppliers, informing customers beforehand that delivery will take longer than expected. Besides this, you can share on your site and send out emails whenever you are low on stock or have modified shipping speeds.
- Expand Your Network of Suppliers
How many suppliers do you have in your network? Most companies prefer dealing with 2-3 suppliers to avoid confusion and competition. It might seem convenient but increases the supplier risk. What if one of your suppliers fails to deliver timely? In addition to production delays, it will lead to customer dissatisfaction. Therefore, every company should have a vast network of suppliers. It will ensure you have a backup available if any suppliers fall short.
However, you have to follow a stringent list of criteria when selecting the suppliers. You have to assess everything from the lead time and pricing to a facility tour. Moreover, select a supplier whose strengths align with your business model. For instance, if you want to send a shipment every week, find someone who has a significant logistics network.
- Optimize Production & Distribution Capacity
Sometimes, delivery delays aren’t the reason behind supply chain problems. Often, it happens due to a lack of safety, cleanliness, and operational inefficiencies. Once you have sorted your supplier network, optimize the production and distribution capacity. You have to make sure there is no clutter lying around in the warehouse. Otherwise, it will become arduous for the procurement team to sort boxes for shipment and delivery.
Likewise, you have to ensure the production team is taking appropriate measures. Supervisors and engineers have to check the machinery and equipment regularly to avoid the likelihood of malfunctioning. Also, you can review the process flows every quarter and cut back on functions that are declining the team’s productivity. Having proper protocols in place will ensure optimal efficiency levels, improving the fulfillment of goods across the entire supply chain network.
- Evaluate Cashflow Impact
Unfortunately, some impacts on the company’s bottom line can be inevitable. In some cases, the production delays lead to order cancellations and financial losses. The only way to save yourself from this financial crunch is to evaluate the impact of cash flow. You have to run stress tests and see where supply chain disruptions have the most significant economic impact. If sales are getting affected because of late deliveries, inform customers beforehand.
Similarly, analyze the outflows in cashflows resulting from refunds of canceled orders. It will allow you to plan and adjust overheads accordingly. Furthermore, you can set some funds aside to cover supply chain disruptions. It would leave your profits and bottom line unaffected, ensuring financial stability.
In 2022, there will be hardly any business unaffected by supply chain disruptions. Post the COVID-19 pandemic, the endless travel restrictions and global lockdowns have made cross-border shipments more challenging. As conditions have started to ease, every company needs a resilient supply chain strategy to continue business operations successfully. Organizations have to plan their response, assess supply chain risks, and diversify the suppliers. In addition, they have to analyze the financial impact to secure the company’s profitability.