Supply chain disruption is a fact of life for every company that moves any type of product. There won’t be a new normal, just new sources of disruption, from weather to government policies to industry conditions.
Don’t expect to plan for every disruption; instead, develop a strategy to overcome supply chain disruption, regardless of the source. Supply chain resiliency is the ability to adapt to and overcome challenges to allow your company to continue to serve customers at the highest possible level. A resilient supply chain may be stretched to the max, but it doesn’t break. And it bounces back, perhaps taking on new shapes as necessary in response to the latest disruption.
Preparing your supply chain for resiliency begins with risk management and a proactive strategy. It’s not enough to have a Plan B, just in case. Your organization must be scanning the horizon for whatever may be coming next.
Overcoming Supply Chain Disruption
Your organization’s ability to anticipate disruption, adapt to events, and build resiliency is rooted in how you maintain operational continuity. You must have the people, processes, and systems in place to create your resiliency plan.
Prepare your supply chain for different types of disruption
A wide range of events could prevent your supply chain from operating normally, but not all events have an equal impact. Severe weather can shut down entire locations for short periods, but recovery may happen quickly. Other issues such as trade disputes and tariffs develop over long periods with a high degree of uncertainty. Your supply chain must be capable of adapting to all types of threats.
Weather. Globally, natural catastrophes are the top concern for businesses in East Asia and the Pacific. A brief look at the GlobalTranz blog for January and February shows about a half dozen winter story advisories across the U.S. These are just a recent indication of the disruption from weather events and natural disasters that your supply chain may encounter. A storm may leave roads closed, warehouses shut down, utilities lost, and employees stranded. Alternative sourcing and routing, contingency plans and redundant systems can help weather any storm. Your organization can partner with a supply chain consultant like GlobalTranz’s Solutions Team to develop a strategic plan to overcome natural disaster challenges.
Trade disputes and tariffs. Global trade regulations and conflicts, as well as tariff threats as a political tool, could cut off sources and markets and push your business plan into the red. It’s vital to work with a supply chain consultant with global expertise to monitor these threats and develop solutions to lessen the impact on your business.
Cyber threats and attacks. Your company is likely under cyber attack as you read this. The bad guys only have to get it right once in a while to cause catastrophic disruption. Some of the largest companies in the industry have been forced to pay ransom to restore technical operations. Other companies have lost intellectual property or customer information and have not found out until the damage was done. It’s vital to identify and protect critical vendors and partners that could be unwitting attack vectors.
The average cost of a data breach reached $3.86 million in 2020, with compromised employee accounts the most common cause. Your transportation consultant can help develop response strategies to ensure your supply chain continues to operate while the problem is addressed.
Capacity constraints and transportation delays. Shifting consumer demand, bad weather, driver shortages, fuel prices and an array of influences conspire to shrink available capacity. During peak season 2020, small parcel shippers faced “shippageddon” due to the boom in e-commerce. Carriers pushed larger items out of the parcel networks and restricted volumes from parcel shippers.
Partner with a 3PL can help you find capacity where and when you need it, such as tapping regional parcel carriers and re-thinking packaging strategies. GlobalTranz helped numerous customers overcome these constraints and maintain customer satisfaction.
Price fluctuations and sourcing issues. The pandemic drove up prices on many consumer goods as people shifted spending to e-commerce and bought at holiday levels in early spring. The system wasn’t prepared for the surge, driving up pricing for transportation and sapping inventory levels.
While the pandemic seems like a natural disaster, the long-term global disruption is unique. While supply chains are recovering, a recent survey found that 57% of shippers experienced longer lead times from suppliers in China.
The pandemic highlighted the interdependent nature of today’s supply chains. A virus in China disrupts auto manufacturing in Detroit, or a flood in Thailand takes out a cluster of research and production facilities. Abrupt disruptions can drive prices sky-high, or a vital product may not be available at any cost.
Work with a supply chain consultant who can help optimize your network design and ensure a strategic approach to your sourcing to anticipate these challenges.
Overcome Supply Chain Disruption With Organizational Resiliency
Your organization’s ability to anticipate disruption, adapt to events, and build resiliency is rooted in how you maintain operational continuity. Russ Felker, GlobaTranz’s Chief Technology Officer, conducted this webinar to help leaders develop and sustain organizational resiliency plans.