Your supply chain is delicate. If just one link in the chain is disrupted, it can have a significant impact on multiple aspects of your business. So what steps can you take to maintain business continuity and minimize the impact of unforeseen disruptions?
While there's no single answer to truly prevent supplier disruption, the key is is to not be caught by surprise and minimize its impact. Strengthen your logistics operations and be prepared with these ways.
What Is Supply Chain Disruption?
Supply chain disruption is defined as major breakdowns in the production or distribution of a supply chain, including events such as a fire, a machine breakdown, natural disasters, quality issues, and an unexpected surge in capacity. It can lead to decreased productivity, increased costs, rising customer dissatisfaction, and more.
For example, the aerospace and defense industry depends on thousands of suppliers and subcontractors — there are an infinite number of events that may affect the cost, timing, and risk of a supply chain. In 2016, the Airbus A350 program was in a crisis because of serious supply chain delays from a seats and cabins supplier. Only thirteen A350s made it to customers in the first three months, despite a projected plan for roughly 80 deliveries before the end of the year. Supplier bottlenecks for Airbus eased by the second half of 2017, but is an example of supply chain vulnerability and the cost of disruption. Let's review some ways you can overcome supply chain disruption, should you experience it.
What Should You Do When You Experience Supply Chain Disruption?
1. Reference Your Emergency Situation Plan
What happens when a bridge on your driver’s route collapses? Or a river overflows? What happens if a supplier is in the middle of a snowstorm and loses power? These “what if" scenarios are numerous, and though many may seem unlikely to occur, it’s still good to have a contingency plan in place. Planning out alternate routes, nearby suppliers, and different shipping and inventory options can help mitigate the headache you receive when in the middle of an unexpected crisis.
2. Have End-to-End Visibility
According to a study by the Business Continuity Institute, 72% of suppliers who have dealt with a breakdown in their supply chains have lacked the full visibility needed to come up with a fast and simple solution. Don’t make the same mistake. Having a thorough and complete understanding of every element of your supply chain, and the contingency plans set in place from your suppliers, will help you plan ahead and properly respond when a disruption occurs.
3. Create Open Lines of Communication
In the middle of a crisis, there are lots of things that have to be done. Keeping everyone on the same page is one of them. If you need to temporarily reprioritize your operations in house, let your employee’s know. If you need to outsource the work because you are at capacity, contact a new supplier immediately. (Source a supplier here and make sure you're listed too.) Need to reroute your distribution team? Make sure your entire fleet is aware of the change of plans. Everyone from the factory floor to your inventory team should know what’s going on, how it affects them, and what they can do to help.
4. Ensure Customer Satisfaction
Hopefully, your customers won’t notice any setback in the supply chain. But in case they do, that open line of communication we just spoke of needs to extend to them. During an economic downturn, it's important to let them know if your supply chain has been affected and what you are doing to address it. Transparency is vital, especially if you hope to have this customer repeat their order. While it’s not ideal, you should make sure the customer doesn’t feel like you are hiding any information. To help soften the blow, consider taking measures such as offering payment compensation.
Related Info: Customer Delight And Exceeding A Customer's Expectations
5. Supply Chain Vulnerability Audit
Again, mistakes happen. Not every situation can be avoided. And if the challenge you experienced was unexpected and unaccounted for, it may be time to perform a vulnerability audit. Though it may take some time away from your regular operations, it’s the first step in preparing for future surprises. You should evaluate if your solution was worth replicating or if there is a more efficient way.
6. Document Response Procedures
It may go without saying, but after performing your vulnerability audit, make sure to update your emergency plan. Document the situation and solution for future reference, should this particular disruption ever happen again.
Those companies that prioritize risk management before, during, and after events are best positioned at securing their bottom line and strengthening their brand. Sourcing on behalf of a manufacturer or distributor and thinking about adding some suppliers to your supply chain in case of an emergency? List your business on the leading platform for product sourcing and supplier discovery.
Other Supply Chain Resources
Thomas has been supporting the manufacturing industry for more than 120 years. A strong and transparent supply chain is vital in today's economy. Here are additional resources to keep your supply chain resilient:
- 4 Contract Management Best Practices For Improving Supply Chain Performance & Quality
- 8 Ways Thomas Can Help Improve Industrial Sourcing
- Internet Of Things In The Supply Chain: 3 Challenges
- Top 6 Benefits Of Local Sourcing
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