Right now, we face the most serious threat to global supply chains in our lifetime. Globalization has made the world much smaller, a shift that has benefited businesses of all sizes and industries but this also comes with risks.
If your company depends on a network of suppliers around the world, your supply chain is always vulnerable to disruption from factors outside your control, like natural disasters, tariffs, shortages or geopolitical clashes. Nearly 75 per cent of businesses in North America have experienced supply chain disruption because of COVID-19, according to a survey conducted between February 22 and March 5 by the Institute for Supply Management (ISM).
This current crisis is a reminder to all business leaders that disruptions will happen, and we must be prepared with resilient and adaptable contingency plans.
According to the Entrepreneur, here are a few ways to Prepare for major supply chain disruptions:
1. Plan for disruption.
Unfortunately, threats to supply chains are inevitable. Learn to expect the unexpected, whether it’s a virus, a storm or a strike. Develop a robust backup plan — or ideally, several plans — to overcome unforeseen obstacles.
2. Develop different levels of contingencies.
Different situations call for different responses. If your supply chain has a global footprint, think of your backup plan as a series of contingencies with spare capacity built-in. Create a crisis management team that is responsible for evaluating priorities, weighing tradeoffs and turning on contingencies, depending on the current conditions.
3. Stay ahead of demand.
Demand can be unpredictable during a crisis, and you have to be able to track and analyze it in real-time. The demand cycle lags supply disruption, so keep a close eye on current trends, and follow consumer behaviour so you can redirect product levels quickly based on changes.
The current health crisis is still unfolding, and its full impact is yet unknown. But you can take steps to reinforce your supply chain and develop your contingency plans to safeguard your company against other serious disruptions and prepare for the next crisis.