Most customers may never give it a second thought, but business owners are well-acquainted with the fact that supply chains operate like a well-oiled machine. Due to the COVID-19 pandemic, disrupted supply chains made it difficult to provide communities with the pandemic response, including food, vaccines, and other medical supplies. Find out how business owners can prepare for disrupted supply operations to benefit both customers and employees.
What is a Supply Chain Disruption?
Supply chain disruptions create anxiety and uncertainty for consumers and businesses during turbulent times in the market. Supply chains are a network of organizations, individuals, and activities. These interconnected parts seamlessly move a product from a manufacturer or supplier to its final destination, such as a customer or retail store. Any change or crisis along the supply chain will immediately impact the whole process. Here is a brief overview of the supply chain:
- Tier 3: Suppliers provide raw metals that are used to construct specific products.
- Tier 2: Suppliers are typically composed of small businesses that create products and sell their products to a company that directly deals with major corporations.
- Tier 1: Suppliers directly sell products to major corporations. OEMs or distributors manufacture and sell products directly to the consumer market.
Not all supply chains will provide all tiers in the supply chain, but businesses and eCommerce will rely on this highly interdependent chain.
What are the types of Supply Chain Disruptions?
Pandemics
Remember how hard it was to find a roll of toilet paper at the height of lockdown? Whether it involved stacking shelves in a retail store or getting online orders to appear on a doorstep, consumers were in for a rude awakening as the COVID-19 pandemic disrupted supply chains worldwide. According to the Institute for Supply Management, 75% of the 600+ businesses surveyed in the United States experienced supply chain disruptions. Due to the rapid increase in demand during a pandemic or global health crisis, suppliers can experience unprecedented strain, and normal operations down the production line will be affected.
Transportation delays and failures
Due to rapid globalization and increased trade opportunities, most supply chains include international suppliers. Increased business opportunities can lead to congestion in domestic and international transport networks, especially in times of natural disaster or regional lockdowns.
Natural Disasters
Natural disasters like tsunamis, hurricanes, wildfires, floods, and tornados can have far-reaching implications on the global economy and production line, depending on the affected area.
Price fluctuations
Changes in supply and demand can cause unavoidable price changes for suppliers. You will have to decide whether you should raise your prices, switch suppliers, or narrow your profit margin.
Product issues
Any problem in quality management will cause production delays. Faulty or sub-par merchandise can have severe implications for customer satisfaction in the long run.
Hacking
With increased dependence on logistics and supply chain software, cybercriminals are targeting these lucrative operations. According to a report, cyberattacks accounted for more than half of supply chain disruptions in 2018. It has the potential to cause massive setbacks that are worth millions of dollars.
How does my business prepare for Supply Chain Disruptions?
The first step is to create a supply chain emergency plan and budget. To effectively get this done, you must conduct a thorough risk analysis to figure out the weakest links in your supply chain. Don’t forget to factor in environmental, political, and social factors. It will also be best to build up your inventory and find backup suppliers from different locations in the event of a disruption. Make the most of technology to figure out potential threats along your supply chain. Find reliable software with AI mapping, analysis, security systems, predictive tools, and customer service solutions.
Partnering with a Logistics Expert
Supply chain disruptions are complex occurrences that require thorough research and preparation. The best course of action to successfully assess risk and prepare for these disruptions is to get support from a logistics and supply chain expert.
Companies like GoShip.com will get you in touch with the most dependable industry experts in logistics and freight shipping. At GoShip.com, you should be able to find the right freight courier that knows how to navigate supply chain disruptions, fees, and surcharges. With GoShip.com’s digital platform, it is easy to get an instant online quotation, booking, and customer support management.