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How to manage supply chain disruptions


Men move boxes around a large warehouse

A supply chain is a network between a company and its suppliers involved in the production and distribution of a commodity. When disruptions come into play, there is a disturbance or problem interrupting this process. Companies actively try to avoid these issues to maintain productivity and ensure on-time delivery to customers. However, despite efforts to minimize these problems, supply chain disruptions often transpire at some point or another, testing the company's resiliency.

Reasons for supply chain disruptions

Supply chain disruptions are often more common than most organizations may anticipate, and frequent causes for these issues include:

1) Inaccurate and inefficient planning
2) Fluctuations in costs
3) Inefficient responses to technology trends
4) Shifts in governmental regulations
5) Transportation failures or delays
6) Natural or environmental occurrences

However, a majority of the current ongoing disruptions are largely attributed to consequences from the COVID-19 pandemic. Fortune reports that 75% of companies are seeing supply chain disruptions from the national health crisis and have seen negative impacts as a result. Moreover, Zippia reports that these disruptions can cause a hefty 62% loss in finances overall. The pandemic had such a large impact because organizations reduced the production of goods and services as a COVID-19 mitigation strategy, not understanding the difficulty of returning to pre-pandemic levels. This has ultimately led to an increase in prices and a growing shortage of goods across the country. While it's predicted that disruptions will continue for some time before things return to normal, there are several strategies for businesses to keep in mind to minimize these complications.

Strategies to minimize disruptions

1) Create a contingency plan
This is an essential way to ensure that disruptions do not completely derail the operation. It is valuable to consider all of the ways to transfer goods or products, as well as set aside emergency funds that are available when needed.

2) Recognize backup suppliers
It may be beneficial to identify alternative suppliers and begin building meaningful relationships with them. On the off-chance your primary supplier is unable to get your goods to you, your alternate may have the ability to help out.

3) Stock up on inventory
The pandemic has re-introduced the need for organizations to build up inventory in case of disruptions. Collecting essential supplies can be an invaluable way to keep your business going if supply chains are temporarily cut off.

4) Conduct a vulnerability audit
Finding weak points in the system is advantageous for organizations to recognize issues before they become extreme. Moreover, examining these internal structures can help businesses identify where alternative suppliers may be needed.

5) Diversify your supply base
A diversified supply base can minimize the risks of disruptions by establishing relationships with suppliers in several locations. This increases the chances that you are able to access goods if major disturbances occur.

6) Utilize risk evaluation tools
The more technology develops, the more useful it can be for predicting and evaluating potential risks to consider. This can include the evaluation of cyber threats or environmental analysis solutions to help identify potential shortages and prevent major disruption consequences. 

Unfortunately, supply chain disruptions don't come with warnings. That's why preparation for this eventuality is critical. While there is no way for businesses to completely eliminate the possibility of shortages, implementing strategies to mitigate these issues is the best line of defense against current and future supply chain disruptions.