Your supply chains are under more stress than ever, whether they cross borders or are entirely domestic. You need strategies to mitigate risk and manage disruptions.
Has your organization experienced the impact of any of these threats?
- Extreme climate events disrupt transportation, damage supplier facilities and even disrupt your suppliers’ suppliers. And shipments can be lost or destroyed.
- Tariffs and trade disputes increase costs, sometimes so far as threatening your business model. These conflicts also stifle long-term planning and erode the ability to secure stable pricing. At worst, suppliers cease to be viable options altogether.
- Regional conflicts and political turmoil can suddenly break a supply chain for indeterminate periods and leave you wondering what will be left after.
- Labor actions disrupt deliveries and then could impact pricing to satisfy new labor agreements.
- Suppliers fail and could disappear with little or no notice.
Act now to prepare for the inevitable supply chain disruption. Establish your specific priorities after a disruption until you can resume normal operations. Plan the steps you will take regardless of the cause of the disruption.
Then take these proactive steps:
- Identify and pre-qualify alternate suppliers. Do this when you have the luxury of time for due diligence and to adhere to procurement policies.
- Routinely divide your requirements for key production inputs among two or more suppliers. This is the only way to ensure they each meet your quality, capacity and redundancy requirements. You may sacrifice preferential pricing of a sole supplier but the slightly increased cost will be much less than the cost of a disrupted supply chain.
- Establish service level agreements (SLAs) and periodically test compliance to ensure suppliers can serve your operational requirements as promised.
- Require suppliers to share their recovery plans and show proof those plans are tested and kept current.
- Require suppliers maintain excess inventory. Ensure your contract enables you to periodically verify the inventory is maintained.
- Re-imagine product design, materials and production methods to reduce reliance on a single source, region or nation.
- Increase your own inventory on hand. Again, the cost will be lower than the costs associated with the disruption.
- Streamline your requirements and procurement process. Simplify your procurement by reducing the inevitable and inefficient SKU redundancies that accumulate over time.
Maximizing supply chain resilience is an ongoing effort and worthwhile investment.
