What You Can Do to Ensure Your Supply Chains Don’t Run Out of Stock

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Recent global events have thrown supply chains into upheaval. Experts predict that the current supply chain difficulties may continue well into 2022 and beyond, entities small and large are doubling down to reimagine more durable or dynamic supply chains that can withstand significant disturbances. With some intentional planning and proactive action, it is possible to fortify and diversify your supply chain and help mitigate costly interruptions.

Global Supply Chain Shortages during the Pandemic

In November of 2020, the U.S. Cybersecurity and Infrastructure Security Agency (CISA) polled 450 executives from a range of industries on COVID-19’s effects on the global supply chain. The study reported that 62% of firms experienced significant supply chain disruptions. A number of factors have contributed to this reality. Staffing shortages and strikes, changes in demand, significantly increasing the production and transportation demand for items like protective and medical equipment, the global nature of the pandemic that left no market untouched, and economic upheaval and insecurity have all taken their toll on supply chains for every conceivable industry.

The continuing impact of these widespread phenomena are expected to linger long after the neutralization of COVID-19. It is likely that the processes and realities made necessary by COVID will remain in place to some degree for the conceivable future to mitigate the harmful risk of future widespread disturbances.

Industries across the board are actively working to repair broken supply chains, find alternative methods of meeting demand or responding to severe shortages or over stockages, and shore up damaged processes or depleted workforces. Progress is being made towards easing the upheaval and mitigating the largest uncertainties, but many sectors are still reeling and this will continue to strain markets for the foreseeable future.

How to Handle a Supply Chain Disruption

Supply chains vary widely by industry type. Its scope (whether it reaches internationally or remains domestic) also greatly informs how affected it may have been by the COVID-19 pandemic. It’s important to approach solving a supply chain disruption armed with a deep understanding of the nature of your supply chain and how that will inform the types of problems or weaknesses to which it would be most susceptible.

Supply chain case studies can help depict the nuances of supply chain crisis management. As an example, one medical device manufacturing company that operates internationally out of Japan shared two key actions that were taken at the beginning of the COVID-19 pandemic that lessened the adverse effects other manufacturing firms experienced more severely. The first of these was to prioritize regular cross-faction internal communication amongst procurement, production, and supply chain decision makers within the company. The second was having pre-existing stockpiles of key materials and inventory spread amongst the various regions in which the company operates. When demand changed, procurement became strained, and shipping costs increased substantially, the company had stores from which it could draw to continue operations more normally than other companies who were forced to halt operations when they experienced the same challenging conditions.

Though best practice will vary across different types of supply chains, these core concepts can help any supply chain management system better prepare for interruptions or difficulty. In addition, employing a few strategic key practices can help fortify any supply chain and lessen the risk of upheaval.

Supply Chain Best Practices

When evaluating your current supply chain, take into consideration the following tips:

Make Sure the Right Decision Makers Are Calling the Shots

It is tempting for the C-Suite or high levels of management to start making supply chain decisions during times of crisis. When experiencing high levels of adversity, leaders can feel pressure to take decision-making into their hands and restrict control in an attempt to navigate difficult or complex situations.

However, doing this can actually increase the likelihood that poor decisions are made by people that are less qualified and knowledgeable about the specifics of the entity’s supply chain than those employees who work closer to the process and better understand the situation. Many companies have reverted to letting upper-level management usurp control and make decisions that end up doing more damage. When experiencing supply chain adversity, make sure the people that best understand the specifics of your supply chain are empowered to make decisions.

Train Your Workforce on Every Part of Your Supply Chain

Too often, departments or teams within a company are not privy to a working knowledge of the entire supply chain. When each part of the organization deeply understands their own realm but has no understanding of how other parts work, information remains siloed and decision makers cannot make informed choices about how to operate or respond in extraordinary circumstances. It is vital to train your workforce on the entirety of the supply chain process so that each faction can operate in ways that won’t hamper others. Prioritizing comprehensive knowledge in this way leads to effective decisions and processes that can avoid costly mistakes in times of crisis.

Plan before Disaster Strikes

The right time to respond to supply challenges is before those challenges ever take place. Develop a comprehensive risk response plan that analyzes every element of your supply chain, from design to procurement to manufacturing to distribution to inventory management and articulates strategies for responding to problems. Draw from similar firms or industry publications to inspire effective responses. Let previous problems or weaknesses inform the types of hypothetical scenarios your organization might encounter in the future. Draw from these potential cases to create protocol that can be immediately implemented should those things occur. Taking this proactive step could significantly mitigate or prevent adverse challenges that disrupt, harm, or even mortally cripple your organization.

Want to Achieve Excellence in Supply Chain Management (SCM)?

Gain the knowledge and develop the expertise to become an expert in Supply Chain Management (SCM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities. It also captures the management of the flow of goods and services.

In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become. By April, many countries experienced declines of over 40% in domestic and international trade.

COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM. In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart. Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.

Learn about our Supply Chain Management (SCM) Best Practice Frameworks here.