Practical ways to protect your business from supply chain shocks
Supply chain disruptions can affect your company’s revenue and reputation. From weather events to high tariffs to global strife, things can be beyond your control. That’s why you should mitigate risks with local sourcing when possible and by strategically building emergency stockpiles.
Gartner predicts that 60% of supply chain disruptions will be resolved without human intervention thanks to AI. However, technology isn’t foolproof, as cyberattacks can affect how these chains operate.
Companies should always have diverse mitigation plans that account for human error.
What Can Affect the Supply Chain?
Supply chain resilience can be affected by things beyond your control, such as geopolitical tensions. Regional conflicts can create border issues that block trade routes or make sourcing from foreign areas way too expensive to make a profit.
Natural disasters and climate change, from flooding to extreme weather and droughts, can close down shipping lanes or destroy inventory, like crops. Cyberattacks hold digital infrastructure hostage, which stops production lines and affects logistics planning.
Even with the dawn of AI, you still need human labor. Worker issues from strikes and layoffs can affect capacity throughout the process, from manufacturing to loading and proper distribution.
Customer demand can affect whether a supply chain should keep operating as is. There may be unexpected inventory shortages due to a sudden spike in demand or costly overstock from a lack thereof.
How Can My Company Avoid Supply Chain Disruptions?
Going local shortens the distance your product needs to travel, which reduces transportation costs and the risk of potential interruption. You avoid border controls, as using a local supplier means you don’t have to deal with international trade disputes.
Get your inventory quicker with supplies sourced as close as possible, which also means faster restocking in case of a buying surge.
Don’t put all your eggs in one basket; diversify your sources, especially for critical parts. Always have at least a few secondary backups approved in different regions so you can switch orders to another quickly if one shuts down.
Why Does It Matter?
Company stockouts erode trust from the customer. If a customer likes your product, but it is never available for purchase, or their online delivery is always late, they may eventually go to your competition.
If you often have to rush emergency shipments or find urgent backups due to supply chain disruptions, it can cut into your cost control and easily erode your profits.
Should I Create an Emergency Stockpile?
Having safety stock levels can act as insurance in case a supplier shuts down. However, overstocking will cost a lot of money, and there is a risk of certain products becoming outdated or spoiling.
Focus on your critical, hard-to-replace items and avoid trying to stockpile everything.
Protect Your Business with an Inventory Buffer
Don’t let supply chain disruptions bring your business down. Use technology and human sourcing to stay ahead of the game by stockpiling critical needs, having several options available, and focusing as locally as possible when you can.
Doing so can maintain customer trust and ongoing profits.
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