Just when your supply chain is sailing smoothly, supply chain interruptions become an obstacle and put critical deadlines, business goals, and reputation at risk. Worst case scenario, your operations can come to an extended halt. However, if you have a crisis management plan that is well exercised using scenarios beforehand, you can restore your supply chain faster. Even better, collaborating with dependent suppliers during planning phases can further improve your organization’s ability to recover.
Supply chain disruptions hold the extravagant potential to shrink the economy by resulting in shortages, inflation, goods waiting at ports, and factory closures, and ultimately make the economic crises worst. In the first half of 2020, the coronavirus pandemic was the primary reason for several supply chain disruptions, and to an extent, it still is. Let’s rewind to the most well-known example of toilet paper early in the pandemic. Panic buying and hoarding clearly disturbed the supply chains with organizations not anticipating consumer buying behaviour patterns as a potential risk to the supply chain.
The pandemic has been very well adapted, but its consequences have eclipsed other risks; not to forget, we have got more supply chain disruption examples caused by trade wars, natural disasters, wars, and other threats remain. To be more enlightening, here are 6 broad classifications of risks vulnerable to supply chains:
Six Infamous Reasons for Supply Chain Disruption
- Natural disasters such as earthquakes, floods, hurricanes, and extreme weather.
- Man-made disasters such as fires, wars, purposeful destruction of properties, and explosions.
- Reputational and compliance issues such as sustainable procurement, conflict of interest, or non-compliance to regulatory frameworks.
- Cyber and security attacks such as data theft, ransomware, and insider attack.
- Financial and company viability like revenue outlook and force majeure.
- Geopolitical issues such as tariff hikes and civil unrest.
Being Proactive and Not Reactive is the Key to Manage Supply Chain Disruptions
Speed matters, especially when you are combating supply chain interruptions. Putting it simply, the faster you react to interruptions, the better you get the hand of your disruptive supply chain perils. This is one of the biggest reasons why ideal risk and crisis management methods are backed with automated software that warns you of disruptive events in real-time and often in advance before they knock at your office door.
You learn of threats before the disruption occurs by monitoring risks using intelligence, data, including suppliers and supply paths, logistic management, trade union activities, weather forecasts, and financial indicators. Moreover, casting an eye on shifting consumer behaviour patterns may catapult you ahead of your potential competition.
Easier said than done. Thus, we bring you operational strategies to manage supply chain disruptions by empowering the professional to understand their risks and operational blind spots. Such strategies include:
#1 Stay attentive to supply chain disruptions and threats and equip proactive continuity plans
Having business continuity and crisis management plans gives you the advantage of making the right decisions at the wrong times, especially when the margin for error during disruptions needs to be kept at a minimum. In addition, a disaster recovery plan helps you identify crucial points such as where and how to move your supplies and which vendor to talk to.
Robust operational resilience solutions help organizations foster flexibility, ingenuity, and resilience to swiftly adjust operations and resources when irregularity resurfaces on the radar. A contemporary operational resilience software powered by next-generation technologies can ease assessment completion processes especially when conducting threat risk assessments or business impact assessments. The autonomous characteristic can help you detect threats in advance, identify mission-critical processes, recognize effective business continuity and crisis management plans, and inform internal and external parties.
#2 Try to avoid supply chain failures in the first place
As they say, prevention is better than cure. The same can be applied by equipping spare parts on hand for the scenario when your machinery breaks down. Similarly, manufacturers can carry extra inventory if the supply network breaks down. Thinking and undertaking one step ahead of the threat should be the goal. Gauge at vulnerabilities and weak links both inside and outside the organization – and work towards strengthening them. Some of the ways you can get it right:
- Undertake sub-tier visibility and transparency into your supply network.
- Equip tools for actively monitoring new and potential threats for all risk categories and scope.
- Re-check supplier locations and viability.
- Expand your supply chain where possible.
#3 Include supply chain disruption into your strategies
Since the disturbances in the supply chain have become frequent and severe, you as a company cannot act oblivious by being unprepared for future risk events. Believe it or not, expenditures incurred by the losses during a crisis can be many times higher than investing in supply chain risk management solutions. Instead, incorporate supply chain disruption strategies into your business continuity management solutions. Proper planning ensures preparedness ahead of crisis while reducing risk and improving resiliency. You can also get insights on whether the greatest perils lie with customers or suppliers driving disruption.
Effective supply chain risk management includes identifying potential disruptions, assessing risks, and mitigating consequences. Operational resilience software that provides predictive insight can help you dodge interruptions before they occur. Reacting faster and being one step ahead before the risk is crucial. As the threats advance in nature, companies need to follow the same lead. A future-proof business not only sustains large-scale disruptions and competition but leads you to expansion, growth, and improving bottom lines.