Everyone knows the saying, “a chain is only as strong as its weakest link.”
The last two years have been a sledgehammer pounding the global supply chain with a series of blows coming from the pandemic, lockdowns, and now the devastating war in Ukraine.
The chain is still holding, but there is no doubt it’s been weakened, and it’s the responsibility of every business owner to know how to protect their organization against supply chain disruption.
Overview of Current Supply Chain Disruptions
The disruptions that have roiled global trade over the last few years are a result of profound changes in consumer behavior, supply chain availability, and changes to routes as a result of war and lockdowns. There is no one single factor in a chain this complex, but bottlenecks, extended lockdowns in key ports such as Shanghai, embargos, blockades of Russian companies, food shortages, and more have all piled on top of each other to create an enormously tricky operating environment for global suppliers.
Protecting Bottom Line During Disruption
How you protect your bottom line against supply chain disruptions depends very much on your own particular circumstances. Every business has a unique set of challenges, and opportunities, with which to contend.
But here are three fundamental strategies that you must apply to your situation to ride the current crisis successfully:
Understand the Risks
The last thing you can afford is to be caught flat-footed at this time. That means developing a deep understanding of your supply chain; at Tier 1, 2 and 3 levels. Make sure you know who is operating your supply chain, who manages the ocean freight, the state of the ports your goods are using, where problems may occur, and so on.
When you understand the risks, then you know how to manage them.
You can lessen the impact of supply chain disruption by improving your planning well in advance. That could mean better forecasting of demand, or it may mean slowly moving away from Just-in-time inventory management to a more long-term solution. Perhaps you need to employ a new combination of transport modes to help manage the crisis – all of this is doable when you face your challenges head-on and don’t look away.
Enact Proactive Strategies
Don’t wait for a situation to turn into a crisis. Act fast and aggressively early on before the problem becomes an existential threat. Partner up with logistics firms that have a long track record, or invest in forecasting technology that will help you see what’s coming down the road.
Risk Management Efforts from COVID to Conflict
Since the emergence of a fast-moving virus in China two and a half years ago, through the Russian decision to invade Ukraine, enormous pressure has been headed on the backs of global companies and the companies that keep the supply chain moving.
Managing risk has become a necessity for companies that hope to survive and emerge stronger. No crises last forever, and the lessons learned during this challenging time will stand you in good stead when the good times roll around again.