In the past year, companies of all shapes and sizes have been hit hard by uncertainty, shutdowns and unpredictable demand shortages. Now, we’re also facing a prolonged supply chain crisis. It’s been a long time coming, but the COVID-19 pandemic made matters substantially worse.
With the supply chain issues forecasted to continue well into 2022, what’s a business owner to do? While completely safeguarding your business from complications is impossible, these eight steps will help you get through today’s crisis and prepare for future disruptions.
Perform a Vulnerability Audit
When it comes to supply chain disruptions, no business is safe. To start, make sure you have end-to-end visibility. Thoroughly understand every element in your supply chain to identify weak points. While performing a vulnerability audit will likely take some time away from your usual operations, it’s well worth the extra work. After all, the first step in safeguarding your business from disruptions is to predict what problems might arise so that you can plan ahead.
Have a Contingency Plan
Once you have an idea of where your supply chain could potentially falter, begin developing a contingency plan. Play devil’s advocate, asking “what if” to even the most unlikely scenarios. What if your usually supplier gets backed up? What if a natural disaster causes delays in the middle of the holiday season?
Consider as many possible what if’s as you can to build a robust emergency plan. It won’t erase the headache of a disruption completely, but by identifying local suppliers and alternate shipping methods, you can reduce a migraine to a run-of-the-mill tension headache.
One of the easiest ways to prepare for supply chain delays is by broadening your sourcing options. Develop relationships with suppliers in multiple locations to build greater flexibility in a rapidly fluctuating market. Don’t underestimate how important diverse sourcing is to long-term success. Many brands have weathered challenging times largely because they had the connections to quickly locate materials and maintain profits without any prolonged delays.
It’s also wise to identify additional ports your materials and goods can be shipped to in case your go-to destinations are too congested to process shipments in a timely manner.
Try Using Forecasting Tools
A relatively new innovation, forecasting tools use automations to evaluate inventory levels, expenses, and demand to prevent inventory shortages. Forecasting isn’t just useful for emergencies. It can streamline inventory counts and lower overhead costs by doing some of the planning for you. There are many software options available, so do your research to find the best fit for your company.
Build a Buffer
It’s impossible to predict how long a supply chain crisis will last. It may last a few days or weeks, but if it lasts for a year, what then? To prevent a dire emergency, stockpile enough supplies to keep your business running for several months of disruptions. While keeping a warehouse full of goods or raw materials isn’t cheap, it’s cheaper than going out of business because you can no longer keep up with the demands of your customer base.
Consider Starting a Line of Credit
Since stocking up on extra supplies is expensive, starting a flexible line of credit may be a wise business decision. Supply and demand are predicted to ebb and flow rapidly in the near future. Having easy access to capital will enable you to stock up on inventory, pay for priority shipping or air freighting, or keep your customers happy with refunds as a last resort.
Mid-crisis, normal business operations go haywire. There’s a lot to get done, but you can’t move forward if everyone’s not on the same page. In your contingency plan, block out how operations will shift in a crisis and who will handle which tasks. Once you’ve enforced the new plan, communicate clearly with every staff member, from your marketing team to your inventory staff, so that everyone has a clear picture of what’s going on and how they can help move the company in the right direction.
In a perfect world, customers would never notice a supply chain setback. Unfortunately, the world isn’t even close to perfect. In the event that product delays are inevitable, honesty is the best policy. Keep them informed of what’s going on behind the scenes, what you’re doing to fix it, and what they can expect going forward.
They may not be happy, but they’ll be much happier than if they were left in the dark. If possible, consider offering discounts, free shipping or refunds to maintain customer loyalty while they wait.
The supply chain crisis is a major headache for all of us, trucking companies included. Rest assured that we are doing our part to keep shipments on schedule and keep So-Cal businesses running as smoothly as possible. For estimates and questions regarding freight shipping or warehousing, just reach out and one of our experienced team members will be happy to help.