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As an owner of a business that sells goods, your goal is to have that product end up in the hands of the consumer. When everything is according to plan, your products will be displayed and neatly stacked on shelves at the stores. For online purchases, these products will be delivered at their doors. But sometimes, things just don’t go as planned.
In any business, regardless of the industry, there will be circumstances that will hinder you from getting your products to your customers. These circumstances can either be caused by a crisis or a sudden change, and they can hurt the process of moving your products from the supplier to the consumer. This is called supply chain disruptions.
When you are not ready for these disruptions, your margins are jeopardized and your business process will be in disarray.
What are the Most Common Supply Chain Disruptions and How to Prepare for Them?
Here are some of the most common disruptions that can impact your supply chain:
● Natural Disasters
Earthquakes, tornados, hurricanes, floods, and wildfires are types of localized disruptions that can mess up your whole business process. But even when they are localized disasters, they can leave lasting implications in your supply chain.
To give you an example, when Hurricane Katrina hit the United States in 2005, its impact on supply chains was felt greatly. Since local roads, rail systems, and bridges were damaged, moving supplies was a challenge and there were failures or delays with transportation. Thus, the shipments of grain, soybeans, vegetables, fruits, sugar, and coffee from affected areas suddenly came to a stop.
Solution
While natural disasters are out of your control, your supply chain manager should be able to identify high-risk areas. This can help you prepare for the worst and come up with an alternate plan.
For instance, when Hurricane Katrina hit New Orleans where Procter & Gamble had coffee plants, they temporarily moved to Kansas City. So following their example, you need to have a plan that’s always ready in case of emergencies. This includes having a temporary warehouse or, if applicable, increasing production at your other facilities that are outside of the affected areas.
● Product Quality Problems
The quality of a product works together with managing the supply chain. If there were any issues with your product at any point in your chain, there will be delays in shipping. Besides, no business wants to give customers sub-par products as this will reflect them negatively.
Solution
Make sure to create a good quality management system in your company. Faulty and unsafe designs not only disrupt your business but it can also get you out of the shelves for good. Just take a look at these recalled and banned children’s toys.
● Cyberattack
If not protected, a cyberattack can happen to any business at any time. This can damage not only your reputation but your operations and functions as well. While some attacks are meant only to disturb your normal business activity, other attacks are more destructive by copying or destroying your viral data.
Solution
You can’t eliminate the risk of a cyberattack. However, you can significantly lessen it by educating everyone that’s involved in your supply chain. You can also conduct strict and frequent audits of all your suppliers at every level. This is called a supply chain vulnerability audit.
Having this much control is vital since there’s always a need for you and those in your supply chain to outsource the services of third-party providers such as digital or SEO marketing services, photographers, IT consultants, and more.
● Pandemic
The COVID-19 pandemic has been the biggest disruption to date and it’s felt across every industry in every country. From the survey released by the Institue for Supply Management (ISM), almost 75% of the companies surveyed reported a disruption with their supply due to COVID-19. Then there’s about 62% who say they are experiencing delays with their orders from China and 53% are having trouble communicating with their supply chains in China.
Solution
No one can tell when a pandemic will happen. But what you can control is your response.
During a pandemic, the demand is unpredictable. One very good example of this is toilet paper. When COVID-19 hit the United States, there was suddenly a shortage of toilet paper, which companies who supplied them didn’t expect. During this time, people are also buying an extra of everything – from hand soaps to toothpaste.
What does this mean? Demand can cause supply disruption. Thus, you should track current trends and follow your consumer’s behavior. This way, you can redirect your product levels quickly based on these changes.
Bottom Line
Always remember that disruptions WILL happen. There’s no doubt about that. Seeing the impact of such disruptions in the supply chains, the role of having a strong contingency plan that can adapt to changes becomes much clearer.
Preparing for supply chain disruptions, or expecting the unexpected, is certainly a challenge. However, by having a plan in place, you can minimize its impact and resume normal operations as quickly as possible. This means you can prevent steep losses in your business’ revenue.
