top of page
Search

Managing Supply Chain Disruptions

Supply chain disruption isn’t just a buzzword anymore. It’s a growing logistical concern across countries connected by globalization.


In the past, the supply chain models for most businesses were plain and linear. Businesses that suffer from a disruption in their supply chains can either respond to fix it or wait for the supply flow to return to normal.


But with the intricate systems of supply chains today, disruption in the supply chain doesn’t just interrupt. Instead, it spread across businesses and even across sectors of society.


Thus, proper management of supply chain disruption should be in place to minimize its impact on the business.  

In this blog, we’ll talk about how to handle supply chain disruptions. Stick with us at the end of this blog to learn more about how Ship Premiere can help with combatting supply chain disruptions.  


supply chain link broken

What is Supply Chain Disruption?

Before we discuss managing supply chain disruptions, let’s first talk about what it is.


Supply chain disruption is an interruption in the wide network of material flow in logistical operations. This disruption can happen at any of the steps in converting materials into consumable goods.


For businesses, supply chain disruption can start from their supply of raw materials down to distributing it to their customers.


Because of the supply chain structure, a disturbance to one point of the supply flow can halt the operations of the subsequent activities that follow it.


If this problem scales exponentially, supply chain disruption can escalate into a multi-sectorial catastrophe in an area. Worst, globalization can also amplify and spread this interference across various nations around the world.


Causes of disruption in supply chains can be either internal or external depending on the origin of the issues.


Some of the internal causes of supply chain disruptions are:


  • Poor Inventory and Quality Control 

  • Inefficient Supplier Relationships 

  • Lack of Contingency Planning 

  • System Failures and Production Interruptions 

  • Sudden Change in Organization or Management


Meanwhile, external causes of supply chain disruptions are:

  

  • Natural Disasters 

  • Pandemics and Health Crises 

  • Economic Crashes 

  • Geopolitical Upheaval 

  • Transportation Delays 

  • Technological Disruptions 

  • Regulatory Changes 

  • Climate Change 

  • Price Fluctuations


How to Handle Supply Chain Disruptions?

Disruptions in the supply chain can be a total disaster when it happens.


For businesses in the private sector, it could cost them dearly from the halting of their operations. They’ll bleed out their resources faster than they can recover.


That’s why a system for supply chain management should be in place to respond better to any disruptions in logistics that might arise. So, the question now is how do businesses handle supply chain disruptions?


Here are 7 steps for managing supply chain disruption:


  • Create a Supply Chain Risk Management Plan 

  • Map Out Your Supply Chain  

  • Run Supply Chain Disruption Scenarios 

  • Diversify Supply Sources 

  • Improve Supplier Relations 

  • Invest in Backup Inventory 

  • Incorporate Technology into the Supply Chain Planning


inclusions of Supply chain risk management

1. Create a Supply Chain Risk Management Plan

The first step in managing supply chain disruptions is building a supply chain risk management plan for the business.


Supply chain risk management (SCRM) defines your business’ overall plan for mitigating the risks in your supply flow. 


SCRM plans include:


  • Assessing the current state of your supply chain  

  • Identifying potential risk  

  • Outlining a plan of action to respond to the risks 

  • Execution of the plan 

  • Continuous monitoring of the risks 

  • Reviewing for possible opportunities to improve

Now, creating a risk management plan for your supply chain is important because it makes the business resilient to disruptions. It also ensures continuity in the flow of goods even with disruption, thus minimizing the damage to the business’ financials.


Through its risk management plan, your business’ supply chain can easily recover back to its normal operations despite the interruption.



mapping out global supply chain

2. Map Out Your Supply Chain

Nowadays, supply chains are more than just linear chains; they’re now robust webs of fragmented supply networks.


With this added complexity, firms can easily lose track of how their goods and materials move in or out of their businesses.

 

This is where supply chain mapping can help you.


Supply chain mapping (SCM) pertains to identifying and tracking all companies, individuals, suppliers, and distribution centers, that play a part in the business’ supply chain.

 

SCM processes documents and outlines the whole supply flow in the operation from start to finish. As it lays out the supply chain flow, it gives the owners answers to where the business sources the materials or distributes its goods and how.


It’s also able to identify inefficiencies in the systems as well as opportunities to improve them.


However, supply chain maps are important in managing supply chain disruptions because they help businesses spot the challenges and weaknesses in the operation. In turn, business owners can formulate better solutions and contingencies to mitigate the growing risks.



supply chain scenarios

3. Run Supply Chain Disruption Scenarios

Businesses understand how to handle a supply chain disruption better by experiencing it in real life and learning from it.


But no business owners would put their firm at this logistic risk just to gain valuable insight after. It’s counterintuitive from what managers would want for their organization.


A better solution to learn without the risk is by running in-depth supply chain scenarios and simulations.


Manufacturers feed their analytics system with historical data inputs that come from real-life scenarios. Such real-life scenarios include natural disasters, economic crashes, political instability, and even labor strikes from truck drivers.


The scenario models would then run simulations and display subsequent data outputs which managers can observe and monitor. These can help managers predict outcomes from the scenarios and come up with actionable countermeasures to become resilient had an actual event comes.



streamline logistic efficiency

4. Incorporate Technology into the Supply Chain Planning

Technology is a game-changer and a way to have an edge amongst the sea of competitors in the private sector. If your business is currently planning a supply chain risk management, you need to incorporate technology into it.


We’ve seen how we can incorporate data analytics in running a supply chain disruption scenario. But what other ways we can incorporate technology into our logistics planning?


Clearly, we saw the rise of Enterprise Resource Planning software like Oracle NetSuite, SAP Business One, and Odoo to better manage our resources. These sets of software enable firms to better oversee business operations like accounting, material procurement, and risk management.


At the click of a button, we can easily pull out data and valuable insights from our day-to-day activities. We could then evaluate these figures and make quick yet informed decisions that can have a positive impact on our supply chains.


But technological impacts don’t need to be effective just in the analytics aspect of the business. It could also mean an improvement in the efficient use of materials on the production line.


3D printing technology is making the manufacturing process a lot more efficient and faster.


Currently, there are 8 types of 3D printing in the market. 7 of which are currently employed in various sectors of society.


There’s also robotics that produces stellar results in maintaining streamlined production lines for manufacturers.


Research even shows that industrial robots can be 30% to 50% more efficient than manual machine tending. With AI and Machine Learning’s help, experts predict that these values can go higher as more technology is being developed.



business suppliers handshaking

5. Improve Supplier Relations 

Your suppliers might be your greatest allies in getting you through a global supply chain disruption. So, it makes sense to invest in improving your supplier relations.


Maintaining a positive relationship with your supplier starts with onboarding. This process involves assessing suppliers from the pool of choices and integrating them into the business operations once picked.


Next, you conduct transactions with them and evaluate how much of their efforts contribute to the business’s success or failure.


Evaluation is important in managing supply chain disruption because it focuses on what can be done to further improve the supply flow.


Through this, you and your supplier reassess the supply flow and discuss the challenges that come with it. It’s also an opportunity for both parties to collaborate and brainstorm for solutions.


6. Diversify Supply Sources

One of the ways you can make your supply chain more flexible is to source your materials from two or more suppliers. If one of your suppliers fails or delays their deliverables, you can still rely on your other suppliers to supply you with the materials.

  

It’s the ideal scenario to make your supply chain disruption-proof, but it doesn’t always go as expected.


Contracting two or more suppliers often has a trade-off than employing just one. This is because every supplier wants the best leverage on the partnership compared to other competitor suppliers.

 

As a result, suppliers will add and demand more stipulations in transaction contracts to get the most out of the deals with your business. It can even ruin supplier relationships during this kind of engagement because most suppliers want an exclusive partnership with your business moving forward.


Another option to diversify the business’ supply source is to outsource the materials overseas. This helps mitigate any disruption in the supply chain, but it also means adding another layer of expense to the business.



inventory manager inside a warehouse facility

7. Invest in Backup Inventory

Buffer inventory consists of extra quantities in the stock warehouse that act as a reserve during supply delays or abnormal increases in demand.


Companies implement this in their supply chain risk management because it’s such an effective and practical way to counter any disruption in the supply flow. Thus, despite the additional costs that come with storing an extra inventory, the benefits outweigh the cost of maintaining it.


That being said, a backup inventory also does come with a trade-off apart from the additional set of costs.


Inventories can experience shrinkage even under well-maintained warehouse facilities.  

Further, companies can’t allocate a buffer inventory on perishable items like meat, food, and other products.


Ready to Manage Supply Chain Disruptions?

Supply chain instability is a common challenge in today's business environment. It demands innovative solutions, and Ship Premier Logistics, LLC offers just that.


Through our strategic approach to logistics, we provide businesses with the tools they need to manage supply chain disruptions efficiently.


In an unpredictable world, this solution ensures a steady supply of products to meet customer demands and keeps businesses moving forward.

Don't let supply chain instability hold your business back; embrace a more stable future with Ship Premier Logistics, LLC by sending a message to our team or calling us at (855) 220-4746.



10 views0 comments
bottom of page