How to Soften the Blow of Supply Chain Disruptions

In a recent survey by the Institute for Supply Management (ISM) on the impacts on global supply chains, 75% of companies reported supply chain disruptions in some capacity due to COVID-19-related transportation restrictions. More than 80% expect their organizations to experience some impact due to COVID-19 disruptions in general.

Some companies reported that they did not have clarity into the various tiers of their supply chain or the effect of these disruptions. Many have struggled to have the processes and decision-making teams in place so that they can react quickly and minimize supply chain disruptions on their businesses.

Companies that have taken measures to improve resiliency in their supply chain are seeing less of an impact.

So, what should companies be doing right now to prevent, prepare for or soften the blow of supply chain disruptions?

Supply Impacts

• Gain a deeper understanding of resiliency in your supply chain. This includes establishing alternate sources of supply with the assistance of a software platform.
• Collaborate with your critical suppliers. If possible, look for ways to utilize your company’s logistics assets to streamline your supplier’s ability to get their supply to you faster if that is causing delays.
• Create a risk analysis and understand quantity availability and constraints in the sourcing process when evaluating new supply chain partners. Make sure to qualify alternate supply sources to ensure they can meet your supply demands.
• Focus on ways to increase your “safety” stock to combat disruptions in your normal supply chain. Modeling will need to occur to find the right mix of “safety” stock to normal supply chain resources to provide clarity into the financial impacts.
• Look for ways to reduce costs when possible.

Customer/Demand Impacts

• Establish a plan to identify and communicate with key customers to gain an understanding of their anticipated demand. Declines in demand will occur for many companies. Having an intimate knowledge of these declines will be crucial as companies work to make informed decisions throughout the entire supply chain.
• Understand where your inventory is across all channels and locations.
• Look for ways to stay connected and updated on global changes. The faster you can see through the supply chain at all levels, the faster you can react to minimize disruptions.
• Look for ways to change your customers’ buying patterns to effectively alter demand away from items on backorder to items that you can more reliably manufacture or distribute. This could be a great way to turn excess inventories into cash for historically slow moving items.

Workforce Impacts

• Establish IT structures that can support a large number of remote workers.
• Establish safeguards for your production workforce that cannot work remotely. Make sure work spaces are appropriately distanced and add extra disinfecting measures to keep workspaces clean.
• Have a contingency plan in place if one of your key employees becomes ill. Consider cross-training certain employees to avoid disruptions in these situations.
• Ensure key processes and responsibilities are documented to avoid loss of critical knowledge should a key employee be out. If this has been previously neglected, now is the time to make it a focus.

Supply chain disruptions as a result of the pandemic are like to continue and even worsen in the coming months. Companies that respond by taking a critical look at their supply chain strategies and making improvements where needed may come out stronger as a result.

For questions or assistance with learning how to manage your supply chain approach, contact us today. We’re here to help.

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