Are We in Danger of a Volatile Supply Chain Again?
Supply chains were massively disrupted during the pandemic and although it did rebound, the recent conflicts and climate change are just a couple factors leading to higher freight rates and organizations questioning the efficiency of certain processes. The tensions in the Red Sea are cause of alarm, even with the US and UK launching a series of strikes aimed at stopping the attacks and providing protection for the commercial ships. Organizations that assembled new supply chain strategies in the wake of the Covid-19 pandemic are having to put those plans into practice far faster than they may have thought possible.
Many manufacturers shifted from a “just in time” strategy to a “just in case” strategy. The hoarding of inventory allows them to not lose out on sales when the supply chain gets disrupted. However, high interest rates make it expensive to carry large inventories and could cause some organizations to revert to a” just in time” strategy, as supply risks grow.
A business needs to build a plan to become and remain resilient when faced with disruptions in the supply chain. If the pandemic taught us anything, it is to always be prepared for the unknown.
Here are some key steps a business can take to build a more resilient supply chain:
- Ensure transparency and communication: Create and nurture this among all stakeholders in the supply chain. All parties need to participate in information sharing and joint demand forecasting.
- Cultivate strategic partnerships with key suppliers: These can be your longer-term contracts with key direct suppliers, as well as your top-tier partners that are vital to the success of your business. One key benefit to this is they can provide a supplier with cash flow to invest as needed to help offset the supply chain situation. It is also a clever idea to establish relationships with multiple suppliers, so you have multiple sources to lean on to get you the goods you need.
- Champion worker’s rights: Uncertainty within the supply chain will cause demand that cannot be matched if the products and goods cannot be produced on time. Ensuring fair wages, job protection, safe working conditions, and room for growth can be key to attracting and retaining employees in this ongoing labor shortage.
- Achieve agility: Having a solid understanding of the health and performance of your manufacturing process will help you grasp your leading indicators. How quick and effective is your business able to adjust to how the supply chain is operating daily/weekly/monthly?
- Build visibility: Manufacturers and supply chain leaders must accelerate technology adoption and prioritize data and analytics to gain visibility and foresight. This requires the implementation of big data and analytics with predictive and prescriptive analytics, enhanced data quality, and data. MODERN TECHNOLOGY IS THE KEY TO SUCCESS HERE!!
- Standardize your business processes: This allows manufacturers to easily move production among plants, departments, or production lines to speed up recovery and improve real-time response.
Building a more resilient supply chain takes careful planning. By building resiliency strategies into every aspect of your operation, you will be better prepared to meet disruption and fluctuating market trends head on and keep your head, and business, above water in a volatile supply chain.
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