In March 2021, a 400-meter-long container ship got wedged between the banks of the Suez Canal. With no passage for ships for about six days, the incident led to widespread disruptions of supply chains, impacting millions of dollars worth of trade. Even large commercial establishments with the wherewithal to absorb the impact felt the pinch. Meanwhile, for smaller players, it delivered a terrible blow.
Whether caused by a natural disaster, a pandemic, a geopolitical tussle, or a blocked canal, supply chain disruptions tend to halt small and growing companies. Unlike their larger industry counterparts, growing ventures fall short of negotiating power and adequate resources to weather the storm. Sudden inventory shortage drives up premium costs for small companies, jeopardising their bottom line.
So, what should these companies do so that missed shipments don't spell doom for them or endanger their ability to thrive? To mitigate the risks associated with supply chain instabilities, it's essential to have a solid strategy in place. This blog post will discuss 5 strategical approaches to being supply chain-savvy. Let's get started!
The first step is to check all the supplies you currently have in stock comprehensively. This will give you an idea of how long your company can operate without fresh supplies. Once you know this, it's time to turn your focus on the suppliers. Evaluate which ones are essential and which ones can be put on hold for a while without disrupting your business too much. This will help you streamline your supply chain and make it more efficient.
Another strategy is to keep the lines of communication open with your suppliers. In case of a supply shock, you will be the first to know about it and can plan accordingly. Additionally, regular communication will help you develop a good relationship with your suppliers. This way, they might give you some leeway in an emergency. Transparency goes a long way.
Diversifying your supply base can help you mitigate risks. By having more than one supplier for each good, you will be less likely to face shortages in case one of them is unable to deliver. Additionally, this will give you more bargaining power regarding prices.
In the event of supply chain disruptions, businesses must rapidly shift their focus from meeting short-term customer demands to long-term opportunities. By identifying new areas for growth, companies can ensure that they don't miss out on potential revenue streams in case of supply chain disruptions. For example, when the COVID-19 pandemic hit China in early 2020, many businesses quickly shifted their production to other countries to maintain supply.
Technology can be used in supply chain management to track shipments and get real-time updates about the location of goods. This way, you will know exactly when a shipment is scheduled to arrive and can plan accordingly. Additionally, tracking shipments will help you keep an eye on the condition of the goods. This is especially important for perishable items. Supply chain digital transformation calls for building resilience in the supply chain. This can be done by investing in digital inventory management tools and having a contingency plan for disruptions.
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