A supply chain is a network of individuals, organizations and transactional activities that move a product from the original supplier to the customer. A disruption in the supply chain is any event that could significantly impact that process. These events can either be felt locally or globally and, more often than not, depending on the supplier’s origin. It can affect global distribution. However, the importance lies in overcoming supply chain disruption to ensure your business stays afloat.
The ongoing pandemic has been a source of global supply chain disruption. It continues to impact several organizations in North America. In first-world countries, we rarely experience supply chain disruption. We are used to conveniently acquiring our goods within two to three days of purchasing. Supply chain disruptions point out the dependencies on our partners abroad, who, without our control, can cause uncertain times for businesses and organizations alike. The global pandemic has negatively affected most retail companies. Therefore, without our external authority, we can only do our best to handle the outcomes.
There are various ways to combat supply chain disruption, and being prepared for unforeseen events is one of them. For some retail businesses, stockpiling inventory can be beneficial. Although, the size of the inventory must reflect the event frequency and duration. If not done correctly, you can operate at a loss holding high inventory amounts with low demand. The key is to maintain a level of inventory slightly higher than operationally needed to provide safety for potential future impacts.
Diversifying the Supply Base
Diversifying the supply base can be beneficial for companies if a disruption happens locally in the region of one supplier. By dividing up activities between multiple suppliers, you lose the risk of having one event impact your supply chain. However, in extreme events such as the global pandemic — this strategy may not have made a difference, having most suppliers become affected the same way.
Developing Backup Suppliers
Developing backup suppliers is similar to diversifying your supply base, yet it is cheaper. With creating a backup supply, your only cost comes from initiating the contract when disruption occurs. Otherwise, the contract is there on a protective basis to help organizations feel comfortable knowing they are safe in unforeseen events.
Strengthening the Core Supply Chain
Strengthening the core supply chain is a method solely to acquire preventative measures if a disruption occurs in the future. This strategy aims to test the operations of the supply chain with potential stress indicators and disruptors to indicate areas of growth. Eliminating weakness in day-to-day operations allows companies to overcome stress in a controlled environment instead of in a time of live uncertainty. Done well, this strategy can save a supply chain from potential events such as the global pandemic.
Supply chain disruptions can be time-consuming and extremely difficult for organizations to overcome. For example, if disruptions happen in Asia, as a lead supplier of various products, it can cause a global ripple effect impacting large organizations. Fortunately, companies have found ways to combat these unforeseen events with preventative measures and communication. King City Northway has found effective ways to combat our supply chain disruptions in the past and will continue to apply these methods for future events.