Supply chain disruptions are a fact of life. Even in an excellent economy, your business will face at least one supply chain disruption sooner or later. When that event occurs, you need to know how to respond to steady the proverbial ship and keep your business from faltering.
Fortunately, there are lots of ways in which you can respond effectively to supply chain disruptions. Let’s take a look at them one by one.
What Is the Supply Chain?
The supply chain is your business’s unique network of individuals, companies, and transportation specialists who create and deliver a product to an end-user, consumer, or retail business.
For example, if you make clothing to be sold at retail stores, your supply chain includes:
- The workers who harvest the raw materials for the clothing products The people and machinery that create the clothing products The transportation professionals who ship the products to their retail destinations, where they will eventually be sold
While a smoothly running supply chain is a path to economic prosperity, disruptions in any part of the supply chain can cause widespread negative ramifications.
What Causes Supply Chain Disruptions?
Various factors can cause supply chain disruptions, including:
- Trade restrictions from one country or another, such as China, Russia, Ukraine, and other countries where short-term or long-term lockdowns can result in bottlenecks for raw materials, products, or even customers
- Heightened consumer demand for a product, which causes a company to temporarily run out of that product and scramble to make more
- Factory closures or equipment breaking, requiring repairs and preventing product manufacturing
- High freight rates can cause companies to ship less of their product than before
- Overreliance on just-in-time (or JIT) inventory systems
- A single country or firm that dominates specific industries (such as Taiwan in semiconductor exports) has problems at scale in production lines or supply networks
- Other supply chain issues, such as natural disasters or labor shortages
In some cases, many of these factors combine to create a supply chain whirlwind. The COVID-19 pandemic was one example. Even several years after the pandemic’s start, many companies are recovering from disruptions to their supply chains. People could not work, countries worldwide shut down their borders and shipping, and freight rates increased.
The current supply chain still reflects the longer-term damage sustained during the coronavirus pandemic. As a result, one of the most pressing business issues today is how business owners can set up businesses for sustainability, even during difficult times.
Anticipating these vulnerabilities is one aspect of supply chain risk management in this global economy. Stakeholders expect you to know how to handle supply chain problems or supply shocks.
How Supply Chain Disruptions Should Be Planned For?
Although supply disruptions can occur for many different reasons, there are ways in which executives and other leaders within a company can respond to them to maintain order at your company and accelerate the recovery process.
Appoint a Leader
Firstly, you should appoint a clear and capable leader for every supply chain disruption event. Often, you or your supply chain manager/vendor coordinator will be.
In any case, appointing a leader is beneficial because:
- It gives all your employees someone to look to for support or guidance.
- It funnels all the questions to a single source, so miscommunications do not occur.
- It streamlines the response process. Rather than wasting resources trying multiple plans simultaneously, everyone will rally behind one leader with a plan.
You should know who will be your supply chain recovery leader well ahead of time and officially appoint them to the position. That way, should a supply chain disruption impact your enterprise, you’ll know who will head the efforts to build back up or take steps to mitigate the disruption’s effect on your brand.
Have a Backup Plan
Next, you should have a backup plan before disrupting a new supply chain. A good backup plan includes:
- Storing extra products or materials ahead of time
- Have other vendors you can contract with if your current vendor(s) cancels
- Having a PR statement prepared for your customers or followers
This saves valuable time and energy, especially during the disruption's earliest days. When you have a good backup plan in place, you and your leader (and your front-line employees) will know what's expected and what to do to manage the crisis.
Stay in Your Lane
Lastly, remember to stay in your lane and not get in the way of your designated leader. Too many cooks in the proverbial kitchen can cause supply chain disruptions to impact businesses even more negatively.
Allow your designated leader to do their job and stress the same response among others at your company. Everyone needs to know their places and do what's expected of them, not enact half-thought-out plans or try to solve everything themselves.
How Can You Plan for Supply Chain Disruptions?
Looking at supply chain resilience through history is the best way to plan ahead for a supply chain disruption.
If, for example, your business was negatively affected by the COVID-19 pandemic and the associated supply chain disruptions, you should plan for a future pandemic. If your company made it through unscathed or grew even against the massive supply chain issues, try to find out why.
Say that your supply chain operations were disrupted because you relied on one vendor to provide the raw materials you need to make your products.
In that case, you can plan for a future disruption by contracting with multiple material vendors. That way, you'll still have some materials even if one shuts down or cancels the contract.
Furthermore, you should keep abreast of market conditions and factors. Keeping track of the news is an excellent way to get ahead of potential widespread supply chain disruptions before they hit your business hard.
Lastly, consider building up a store of products or materials ahead of time. That way, even if your supply chain is temporarily disrupted, you may be able to continue business as usual for your customers for some time by using that store of products and materials.
The Bottom Line
In the end, responding to supply chain disruptions involves having a plan, appointing a leader, and carrying out that plan to the letter. Of course, it’s also a good idea to have a trusted end-to-end transportation service working for your supply chain in the first place.
That’s why business owners around the country trust RPM. With RPM, you’ll benefit from a robust, durable network of carriers, logistics tools, and cargo tracking, so you always know where your shipments are and what you’ll pay. Contact us today to learn how RPM can bolster your supply chain health.
Sources:
Supply Chain | Investopedia
Why the Pandemic Has Disrupted Supply Chains | The White House
What’s Behind the Global Supply Chain Crisis? | J.P. Morgan
