Supply chain management during a crisis is crucial to keeping your business running as smoothly as possible. If you need help with charting your business processes, then get the help of supply chain mapping consultants.
What Is a Supply Chain?
Knowing what a supply chain is is necessary before you can plan how to manage disruptions to it.
- A supply chain is usually a network of individuals and businesses involved with creating and delivering a product or service.
- Supply chain components include vendors, producers, transportation options, warehouses, distribution centers, and retailers.
- Supply chain functions can include product development, operations, finance, customer service, distribution, and marketing.
- Supply chains can be global in size.
- Efficient supply chains are faster and cheaper.
What Are the Main Supply Chain Models?
Choose a supply chain model that works best for your company. Three common options are a good place to start.
- Continuous Flow Model: This is a traditional model for supply chains. It tends to work effectively for businesses producing similar products most of the time without variation. The lack of variability lets managers streamline their production times and keep a tight leash on inventory, but raw material availability can create bottlenecks.
- Fast Chain Model: This model is a better choice for businesses selling trendy products, as they need to get products to market as fast as they can. The time from prototype through production and then to consumers needs to be short. Fast fashion is a good example.
- Flexible Model: Seasonal businesses often employ this model, as they have demand surges and lulls. This model lets them amp up production quickly but also shut down fast when seasonal demand plunges. Accurate forecasting is crucial to ascertaining needs in terms of labor, inventory, and raw materials.
Learn why supply chain mapping is important!
Types of Supply Chain Disruptions
Knowing how to overcome supply chain disruptions means first knowing the kinds of disruptions that are possible so you can respond accordingly.
- Natural Disasters: Earthquakes, flooding, and hurricanes can all result in destruction, power outages, and emergencies for factories or shipping hubs.
- Transportation Delays: Increased traffic and weather conditions can result in transportation delays, especially in the final few months of the year thanks to a combination of winter weather and holiday road traffic creating bottlenecks.
- Price Fluctuations: Changes in resources and supplier availability can impact the prices involved with both manufacturing and transportation of goods. Companies might want to wait for certain things so prices might come down.
- Cyber Attacks: Even though technology keeps a lot of the supply chain in good condition, it also leaves it susceptible to digital risks.
- Global Pandemics: Supply chains are still recovering from the recent pandemic when they were shut down entirely in many cases. Cargo ships are still backlogged in many ports, and regional labor shortages continue to exacerbate things.
5 Phases of a Supply Chain Crisis
Getting your company through a supply chain management crisis means breaking it down into five specific phases you can more easily navigate individually.
1. Prevent Things in Advance
Preparing for supply chain disruption involves supply chain mapping, as that proves essential during an actual crisis.
- Map out your current supply chain.
- Know what real demand is and differentiate it from panic purchases.
- Estimate where disruptions are most likely to happen.
- Seek out alternative options.
- Conduct stress tests on your supply chain.
Find out why supply chain mapping is beneficial for businesses and then start your enterprise process mapping.
2. Seeing the Crisis
You should be able to use data forecasting to develop a set of warning signals that a supply chain crisis is either imminent or already happening. You can’t respond to something if you don’t actually see it. The more advance warning you have, the more response time you have.
3. Getting By
Managing supply chain disruptions sometimes involves split-second decisions you’re not used to.
- Ascertain emerging action plans about personnel and resources.
- Maximize your available resources.
- Analyze your company’s governance practices.
4. Getting Back on Your Feet
Increased reliance on things such as remote work might happen in a supply chain crisis. Be open to some of that becoming routine for your company.
- Don’t expect your recovery plan to put you back where you originally were.
- Revise every stage of your processes for the new world as it is.
- Does your company buy or make what it needs? Could local options make more sense for a shorter supply chain?
5. Returning to Competition
Any crisis might just wind up being a chance to get innovative with your company’s supply chains and operations.
- Put what you learn into your company’s future impact planning.
- Choose how long you plan on competing in this new reality.
- Make sure your company isn’t too late adapting to this.
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5 Steps You Can Take for a Supply Chain Crisis
Knowing how to handle supply chain disruptions often comes down to five basic steps your company can take. These are a combination of things you can do both in advance of or during a supply chain crisis.
1. Reach Out to More Suppliers
One of many solutions to the supply chain crisis is diversification among your suppliers. Being reliant on just one supplier carries a lot of risks. If their arm of the supply chain is disrupted, so are you.
You might suffer even if the supply chain is generally strong because that one supplier might have a pandemic breakout among its team or wind up with quality control issues. Form relationships with alternative suppliers you might be able to turn to when necessary.
2. Emphasizes Training and Development
Labor shortages don’t just impact the supply chains feeding your business. They hurt you internally, too. Make the most of your current team by cross-training the people you have.
Need external resources coming up with this? Check out our training consulting solutions.
3. Balance Core Product Resources With a Nimble Delivery Model
One way how to overcome supply chain challenges is to balance the acquisition of core product resources with the agility of your delivery model. You should have multiple sources of product resources available to you in case any are temporarily unavailable.
4. Assemble Safety Stock
One tactic you might try in supply chain crisis management is putting a safety stock together. If a supply chain delay or disruption were to happen, how much stock of something would you need in order to maintain steady operations or sales? If you wind up with out-of-stock orders, then sales could be impacted immediately. You’d also lose customer trust, especially if it happens too often. Backup inventory is also crucial after the supply chain stabilizes since competitors will create an influx of demand to replenish their own stocks.
5. Communicate With Your Customers
Communication with customers is a crucial aspect of managing all of this. While technology, automation, and data are all great ways to communicate with your consumer base, you need to go beyond just the data.
Know what their needs and requirements are, and let them know as soon as you are aware of a potential inventory shortage in anything. Let them know about alternative supply arrangements, and keep them up to speed on how things will be remedied and also by when.
Summary
Supply chain disruptions are unfortunately common events in the modern economy. Knowing how to manage your business during one helps you remain operational so you can recover faster. If you want the help of business optimization consultants, then make sure you contact us right away.