Supply chain disruption: How to mitigate risk
Managing the flow of goods and services to support your business is challenging at the best of times. But there’s nothing quite like a global pandemic to sharpen your supplier focus – especially if you rely heavily on imported goods and raw materials from overseas.
Supply chain volatility is nothing new in business, but what happens when this escalates into crisis or disruption? Even with the best intentions and preparedness for freak weather, political unrest, and a fluctuating economy – the most robust plans might have fallen short during the Coronavirus outbreak. It’s been a harsh lesson for everyone in just how much we rely on a smooth supply chain. When this chain breaks down, fear and panic ensue (toilet roll anyone?)
What would supply chain disruption mean for your business?
It’s an important question. And answering clearly and honestly could be the first step in mitigating future risk. Disruption could have a negative impact on your products, manufacturing quality, delivery times and customer service. This can have serious and far-reaching consequences for your business. Here are some key areas to consider to help you stay a step ahead:
Know sooner. Respond faster
Make it a priority to get to know your suppliers. Treat this as part of your due diligence. The more insight you have into their business, the clearer you’ll see how to support yours. In particular, know and understand:
- Where your suppliers are located – they may have a UK office but their supplies might travel all around the world
- Their strategic partners and subcontractors
- How they manage their own supply chain risks
- Who they purchase their products and services from
- What limitations they might face (know before they have to tell you)
- Transport and delivery timescales – always plan for the worst case scenario
- Your first and second point of contact – build a relationship with your supplier colleagues and make sure you’re the person they love to be at the front of the queue when supply is short.
Always have a plan B
Contingency plans are essential for your supply chain. Know where else you can source your materials and products from, even if it will impact your margin. Know what the difference will be so you can make decisions quickly. Delivering reliably to your own customers can be more profitable long term even if it means taking a reduction in profit for a single delivery.
Communicate really well
This starts right at the beginning of your supplier relationship. Set clear expectations for reporting and supplier communication. This ensures an effective business partnership – fewer shortages, more on-time deliveries, less rush shipping costs, and best of all, fewer headaches for you. That’s not to say there is no room for updates, but make sure your updates are thoughtful.
Effective communication also includes saying thank you. You wouldn’t expect the best from an employee without some encouragement along the way so treat suppliers in the same way, and always acknowledge a job well done.
So, in the face of a crisis, are you prepared to adapt your supply chain and respond effectively?
Or will you find yourself on red-alert, scrabbling for solutions to keep things running? If you need any help or advice to strengthen your supply chain and mitigate risk, we’ll be happy to help.