A common problem in any industry is the disruption of supply chain. Supply chain disruptions are often the result of natural disasters, labor disputes, or transportation problems. When this happens, it can have disastrous consequences for your business. However, if you follow these steps carefully at the time of a disruption, you can limit the extent of the damage.
Prevention
Once you know what has caused the disruption, it is best to avoid it going forward. However, if you can’t, the only thing you can do is minimize the impact. So the first thing you need to do is get in touch with your suppliers and re-plan your supply chain as necessary. If you are in a position where you need to move raw materials quickly, you should stop buying them for the duration of the disruption.
Make sure you have alternative plans in place for securing raw materials in the future. And when it is safe to do so, you can still get in touch with suppliers and start the process of rectifying the problem.
Once the disruption has been resolved, you will need to get your hands on the goods.
Conduct A Risk Assessment
Start assessing your situation and see whether the disruption has happened or not. If it has, then take steps to limit the risk to your business. The first and most important thing to do is to determine how big a problem it is.
If there is a disruption of transportation in your area, your first reaction should be to look at the storage capacity in your area. You will need to ensure that you have enough supplies in stock to last until your warehouse can be set up.
A major problem is that supply chain disruptions can be harder to predict than other events. This means that you may not be able to plan for them as well as you would if they were predictable. Therefore, you should do your best to accurately assess the risks that your business is facing before the supply chain disruption takes place. Your employees and supply chain partners can then work together to mitigate the damage if a disruption does take place.
Look Into Your Suppliers
You need to do a lot of research and even have some conversations with your suppliers about their plans and their ability to fulfill your orders. This could involve finding out about your suppliers’ contracts with your other customers. You need to be able to protect your business from your suppliers’ actions.
Reducing your supply chain risk means avoiding expensive and potentially unsafe locations. It also means making sure that you have alternate suppliers in case your current suppliers fail. Be sure that all of your suppliers are aware of the risks that come with supplying you and have a contingency plan if these risks should arise.
You can’t truly prepare for a supply chain disruption if you’re not aware of what’s out there.
Maintain A Stockpile Of Supplies
One of the most important things you can do when a disruption in your supply chain occurs is to create a stockpile. Your business may not be able to perform in a routine manner during a disruption. However, a stockpile of supplies will allow you to maintain normal operations during a disruption.
Instead of purchasing supplies as and when your company needs them, build a stockpile. The stockpile will help keep your company’s operations running smoothly during a disruption. You can stockpile consumables, raw materials, and accessories. By stockpiling these supplies, you’ll be able to avoid having to replace some of your inventory during a disruption.
Online resources allow you to contact suppliers for pricing information, or to see if they can quickly deliver orders. You can also put in orders to your vendors during times of disruption and even update prices based on changes in the marketplace.
Making sure your suppliers are communicating with each other is an important part of a crisis management plan.
Reaction
The first thing you should do after your supply chain is disrupted is to communicate with your customers and suppliers. If you don’t already have such systems in place, it’s time to get them up to speed as soon as possible. This should involve communicating directly with customers and suppliers, on the same channel. This is essential because this allows you to record every action you take, and ensure that you follow through on your commitments.
Once you’ve communicated, you need to make sure that everyone is working together to solve the problem. At this stage, it’s likely that your team will already be working around the clock on the problem.
Be Ready To Act Quickly
When a disruption strikes, it’s important to act fast. Without time to prepare, your business will be in the red. When facing disruption, you’ll need to identify the problem and pinpoint its source as quickly as possible. This means that you’ll need to be ready to act on your first viable solution.
Be sure to obtain data about your business that shows exactly what needs to be fixed. This will help you identify areas that need to be improved first. This data can also be used to address potential concerns before they become major issues.
Once you have all of the data you need, you can begin identifying solutions. You may need to add inventory, add personnel, or switch from the old supplier to the new one.
Know How To React With Customers
Disruption is stressful for your customers. They want their orders to be filled as quickly as possible. The solution is to send them a new, higher priced product to replace the lost product, or at least make an adjustment to their order that is less expensive than the lost product. This adjustment can be made right away, but you should be flexible and make an allowance for a delay of a few days or even a few weeks. Your customers will appreciate the flexibility you are showing, as it will give them more time to adjust their budget.
Remember that when a disruption occurs you are first and foremost a consumer. You have many options for getting your order. Send the item with the best discount you can, or make the item more expensive than it should be to make up for the delay.
Before the disruptions, know how your customers typically react. Ask customers how they normally interact with your products, and see how they react when your products aren’t readily available. Is there a pattern? If so, do you know how to resolve it? If not, that’s a big red flag that your supply chain could be impacted.
While you try to discover what’s causing your disruptions, you need to know if the supply chain is working the way it should. Analyze your company’s suppliers, distributors, and logistical partners to make sure that your company can rely on them to fulfill its delivery needs.
Recovery
If a disruption takes place during a busy time at your business, you can expect customers to lose confidence in your products. As such, you’ll want to ensure that you recover as quickly as possible from the situation. A number of tools are available that will allow you to manage your daily operations and effectively handle your customers.
You’ll also want to monitor stock levels, deal with customer complaints and provide the latest information to your employees and customers. By making these necessary changes quickly, you can get your business back on track as soon as possible.
Having confidence in your product helps when a natural disaster strikes. Take precautions to ensure you’re ready and able to handle potential problems when something goes wrong.
Reestablish The Supply Chain As Quickly As Possible
Remember, any time you run out of something, a disruption can make it very difficult or impossible to obtain that item from a vendor or retailer. Most manufacturers will offer a replacement or a credit to their customers.
The first step you should take is to identify who has the stock you need. You should find out if the company is within a specific time window (a week, for example) that can fulfill the product you need. If not, you may have to source it from an alternative source. You will also need to find out how to best get the product to you. This means checking with suppliers of transportation and dealing with contractors for delivery and pickup.
While you are making these calls, you should make your first appointment with your lender.
When a business is disrupted, it must completely restructure the supply chain, and any other systems that support it. You must act quickly to ensure that the supply chain is operational again. The best approach is to put your “plan b” into action as soon as you can. Do this by engaging with suppliers, vendors, and distribution companies. All of these parties should be able to help you restore supply as quickly as possible.
Additionally, the company should be able to gain insight into the supply chain. In situations where the disruption is global, it’s important to consult with regulatory authorities. These entities can help facilitate the reestablishment of supply chains.
Conclusion
While business interruption can be challenging for some companies, it is a serious issue that can have devastating consequences. By following the steps above, you can ensure that you have the right policies in place to ensure that your business is able to keep running smoothly, even when problems occur.
Even if your company is not directly impacted by a severe disruption in supply, it is important to prepare for this possibility. Especially with increasingly globalized industries, business interruption is often a topic that is much discussed within your industry. Be sure that you are able to find relevant resources to keep you up to date on the latest developments in the industry, and you can greatly reduce the potential impacts of a disruption.
The modern supply chain, with its expansive web of interconnected shipping and manufacturing, can be a very useful and flexible tool for business growth. This will only increase with the advancement of technologies. Being prepared for disruptions at every stage of your supply chain will ensure that your business stays operational.
