The most visible example of a supply chain breakdown was the image of 70 or more ships paused near Long Beach and Los Angeles harbor docks. The pandemic led to labor shortages and negatively impacted a secure supply chain that consistently delivered timely materials and products to vendors and customers. Since then, companies have been looking for ways to effectively enhance supply chain reliability. What can you do to prevent a repeat of pandemic-level supply chain interruptions from affecting your ability to serve customers?
What Does a Resilient Supply Chain Look Like?
You remember the visual of the ships. Consider what it means when a dependable and predictable supply chain does all it should.
- On-time delivery of products or raw materials.
- Full product quantities and accurate types are delivered.
- Delivered goods are free from defects.
- Shippers reliably repeat accurate shipments on time.
- Shipments are easy to track, and receipt is predictable.
- Labor shortages, natural disasters, and similar problems do not affect supply chain resilience.
Supply chain resilience enables your company to build and retain customer trust, avoid costly errors, and stay on track to outperform your competitors.
Take Advantage of Blockchain Technology
With the image of the waiting ships always in your mind, consider that it is time to become involved with blockchain technology. It enables you to enhance supply chain reliability effectively by maintaining data through a network of computers that share information in real-time. Virtually tamper-proof, everyone in the computer network sees transactions as they occur.
Why does real-time information matter? It alerts you immediately when specific conditions are not met. This gives you time to work around anticipated product shortages or delivery delays. Additionally, you will not have to spend time on the phone with distributors trying to locate your expected orders.
Interestingly, the antithesis to blockchain technology is the data silo approach. Everyone involved in the ordering and shipping process has access only to their data. Frequently, this means that two people are looking at different data, which easily results in order problems. If the data silo is your current approach, it is critical to make a change as soon as possible.
Introduce AI-Enabled Proactive Risk Mitigation Methods
There is a great deal of discussion about artificial intelligence (AI), and supply chain resilience may be one of the areas where it can truly excel. What sets apart AI-supported inventory management from what you currently use comes down to accuracy. Avoid human error in listing shipments, departures, and product quantities. Additionally, AI can be integrated to such an extent that it monitors your product stock levels, predicts product shortages based on past shipments, and assists with workarounds by defaulting to secondary vendors when necessary.
Manage Supply Chain Disruptions Before They Happen
It is tempting to think that blockchain technology and AI make logistics challenges a thing of the past. However, that is not exactly true. Challenges to the supply chain will continue; however, the technology provides you with the tools to predict problems and implement solutions well before severe shortages.
Common supply chain disruptions, such as natural disasters, political tensions, and wars, are impossible to prevent. They lead to product shortages and significant delivery delays. You can manage these supply chain disruptions effectively with technology and the steps you take well in advance.
- Safety stock. Maintaining a well-managed inventory of excess products or materials serves as an immediate buffer. It protects your business from sudden changes in supply and demand, supplier delays, and other supply chain disruptions.
- Reshoring. Offshoring efforts sent operations to foreign countries in an attempt to reduce costs. However, volatile supply chains make reshoring, bringing manufacturing back home, a viable solution. In the long run, spending a little extra on production is more cost-effective when you have operational rail or sea delivery avenues. It shortens the supply chain and takes the global variables out of the equation.
- Nearshoring. Reshoring may not be achievable in one step. Consider nearshoring as an alternative. You are still looking to shorten the supply chain and protect yourself from global volatility by bringing operations closer to home. For the United States, this could mean Mexico or Canada.
If unsure how to reshape your supply chain, consider starting with a simple mapping exercise. Group your suppliers by their impact on the final product you send to your customers. Direct suppliers are linked to product finalization. Secondary or tertiary tier suppliers may affect others in the industry more than you. With this map in hand, you can see where your supply chain’s vulnerability will lie.
Tier two or three suppliers may be easy to replace. Therefore, it makes sense to diversify product orders from these suppliers, which lets you switch between different vendors when needed. However, direct suppliers will likely disrupt your production the most if their supply chains break down. When there are problems with them, the safety stock is the immediate buffer that will allow you to continue doing business while looking to replace the supplier.
Logistics and Distribution Improvement
How is your company doing with logistics? It is all about what you do with the products you need to move. Examples include transportation, warehousing, packaging, and handling. On the other side is the distribution. It focuses on delivering finished goods from your company to your customer. You will find order processing, distribution center management, and route planning here. Is there an overlap? Of course!
Logistics and distribution work together to manage suppliers, shippers, and customers. If one segment of this supply chain is off, it will impact the entire process. Therefore, logistics and distribution improvements must focus on the efficiency and effectiveness that has the two working together. Examples of improvements include cross-docking and route optimization. It should also focus on AI integration whenever possible.
What Can Small to Mid-Sized Businesses Do to Manage Future Supply Chain Problems Today?
Reshoring may not be applicable to your business. However, it could apply to one or more of your suppliers. Therefore, the small business owner may have to make additional risk mitigation strategies.
Supplier Evaluation and Selection
How comfortable are you with your suppliers? How sure are you that they can weather supply chain disruptions? It is easy enough to ask them about the steps they have taken to enhance supply chain reliability effectively. If the suppliers do not respond or have plans in place, it may be time to look for others with greater reliability.
Supply Chain Strategy Evaluation
Your supply chain strategy is in place, but does it truly meet your company’s needs? Will it grow with your business? Most importantly, is your strategy resilient? These evaluations may result in innovations. Drop-shipping may be the best option if your business is primarily conducted online. Explore a wholesale approach if you are a B2B (business-to-business) company. Consider a workaround when one of your suppliers is sending your products to a logistics provider that performed poorly during the pandemic.
Focus on Demand Planning
Demand planning is crucial for enhancing your supply chain’s efficiency. The process takes a long-term approach, allowing you to plan the products you might need in January for the year’s winter holiday season. Part of your demand planning involves knowing what your suppliers do during peak periods. If it falls during a national holiday or other occasion, you may need to adjust your shipping request dates.
What Happens When You Do Nothing?
Blockchains, AI in the supply chain, supply chain predictive analytics tools, and supplier diversification sound complicated. When the buck stops with you, and you cannot get excited about researching the benefits of reshoring manufacturing, it is tempting to let it go. After all, things got better after the pandemic; the 70-plus ships eventually reduced to nothing, and you deal with problems as they occur. Right?
Wrong! If you do nothing, you set your business up for failure.
- Data silos lead to supply chain information gaps and poor collaboration between suppliers and shippers.
- Unanticipated order fluctuations disrupt daily operations.
- Missed customer deliveries, inaccurate shipment totals, and uncertain correction options can result in a loss of business revenue.
- Mismanaged inventory causes product spoilage or raw material obsolescence.
If You Need a Starting Point
Maybe getting started is so challenging because there are so many options. Where do you start when you want to make your supply chain more resilient? Contingency planning is a good starting point. It is as easy as finding and cultivating business relationships with alternative suppliers and logistics partners. Doing so lets you quickly switch from one vendor to another when there are problems. With this contingency plan in place, you now have the space to look at demand planning, AI solutions, and blockchain technology.
What Does Working With Predictive Supplier Performance in Mind Look Like?
You need to ship products and maintain consistent shipping supplies to keep your inventory going out on time. We offer new pallets, sourcing materials from suppliers with proven inventory management tactics. While we cannot help you dissolve data silos in favor of real-time data displays, we can make sure you always have the pallets you need when you need them.
Call us today to place an order!
