Tools and technologies to protect shippers against disruption
Disruption in the supply chain and logistics is not a new phenomena. Disruption can come from any source, and can happen on a global or local scale. Those who have been in the industry for some time may have seen a variety of events that cause disruption. In the past, these may have included natural disasters, such as hurricanes or fires. Price fluctuations in the market, issues with product, and overall transportation failures and delays typically contribute as major sources of disruption. Recently however, due to the pandemic, we have seen the biggest disruption in the supply chain industry to date, and it has greatly highlighted the industry's need to build resilience and flexibility.
Disruptions often result in supply shortages, demand instability, and inventory difficulties. Your customers are likely just as frustrated as you, but they understand that some things are simply out of our control. Be transparent and communicative with them about what is going on with delays, and facilitate regular interaction with others who can provide information about your shipment. In addition, do what you can to help your workforce overcome the disruptions. Strong business leaders make themselves flexible and innovative in the face of difficulties. Support new ways of working and adjust your strategies as necessary.
According to Accenture, "94% of Fortune 1000 companies are seeing supply chain disruptions from COVID-19 [and] 75% of companies have had negative or strongly negative impacts on their businesses." To minimize your losses and continue operating efficiently, supply chain leaders have a few options at their disposal. If you want some tools and strategies to help you react to and protect your business from disruption, this article is the one for you.
1. Plan Ahead
Because of the unpredictable nature of disruptions, the best defense comes in the form of preventative measures. Once an actual disruption affects your business, you likely won't have too much time to organize your response, and external market factors from the disruption may limit your resources. Update your risk management strategies as needed and create an emergency plan for the future. Consider setting aside an emergency budget, and be aware of potential risks or threats. You can get a better idea of what to plan for by using predictive analytics technology.
2. Diversify Your Supply Base
Furthermore, it is strongly encouraged to diversify your supply base and have supplier options in different areas in the event that your usual supplier is unable to provide due to the disruption. When searching out multiple supplier options, it is important to consider the consistency of quality, as well as the associated costs (e.g. fiscal). Additionally, it is recommended to plan ahead with backup suppliers - this is a less expensive option and can be achieved by entering into agreements with vetted suppliers that will come into effect in case a disruption or emergency does occur.
3. Secure Inventory
The next thing to consider is building up inventory. A great tactic to help deal with uncertainty, begin increasing your inventory stock by buying ahead, whether the inventory are essential components or finished products. The amount of emergency inventory should be balanced with the costs of procuring and storing these items for a length of time. Whenever you tap into this extra inventory storage, create a plan to continue replenishing it so that you are not left in a vulnerable position if something else unexpected occurs.
4. Manage Demand
This is another option to help you deal with disruption issues. Do what you can to best position your business with the resources you have. For example, a company that offers multiple products or services can temporarily "replace" the product experiencing disruption issues by offering a different product in its place. Companies can incentivize their customers during this time by introducing factors such as discounts. If that strategy is not applicable, another way to manage demand is by prioritizing your customers. Distribute your available inventory supply carefully and by identifying your most important customers.
5. Improve Visibility
Improving visibility with a logistics control tower is one of the most helpful technologies available when dealing with disruption. Having access to end-to-end visibility for example will give you a higher degree of control over the logistics process. Using AI, data intelligence, and analysis can provide you with visibility even before a disruption impacts you. Identify trends and alerts with actionable insights generated by the technology. Other types of control towers, such as for inventory or supply assurance, are also useful tools against supply chain disruption.
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