A SUPPLY chain refers to a company’s logistics network with its suppliers and the distribution of products to customers. It also involves the steps that need to be taken to get a product from its original condition to delivery in its final state to the buyer.
Therefore, a consistent supply chain can provide significant benefits to a business organisation, including:
- Better control of the manufacturing and delivery process
- A smooth relationship with suppliers
- Enhanced company reputation
- Greater control over costs while maintaining or increasing profitability
There are many factors that can slow down a supply chain and the delivery of a shipment, such as:
- Health and safety hazards
- Data theft and other criminal activities
- Supplier side issues
- Natural disasters
For instance, many UK companies face supply chain problems because of a shortage of drivers. One study highlighted that this can be due to a variety of reasons, including:
- Covid
- Brexit
- Structural issues such as the inadequate supply of drivers
In addition, many UK firms have found their operations disrupted by global supply chain problems, such as:
- A rise in energy costs
- Shortages in electronic components
- An increase in shipping costs and delays
- Panic buying
These risks are commonplace in the supply chain shipping industry. For example, if you are experiencing disruptions to your logistics operations, this could have a negative effect on your company’s reputation. Fortunately, you can mitigate or possibly eliminate the risks by adopting effective supply chain management strategies.
Supply chain management focuses on constantly improving a company’s logistical operations. If you are responsible for your company’s supply chain management, you must try to find ways to improve the process.
However, before implementing any changes, you must be sure that it will improve your existing supply chain operations. You can gauge the suitability of your proposed modifications by asking yourself the following questions:
- Will it increase current productivity?
- Can it reduce the supply chain’s operational costs?
- Will there be an increase in the return on investment (ROI)?
Your new supply chain strategy should comply with the relevant health, safety and environmental laws. Many successful companies use the following tactics.
1. Never rely on a single supplier
Suppliers may fail to deliver your order for a variety of reasons, such as:
- A sudden increase in demand
- Issues involving their own supply chain
- They pause or cease their operations
Therefore, it is vital that you have a number of suppliers; although you may have a preferred partner, it is always useful to have an alternative in mind. This will reduce the risk impact in case the first supplier fails to deliver. You should also consider having suppliers in various locations as this will enable you to avoid local issues that could negatively affect your supply chain.
So, if you currently only have one supplier, we would advise you to begin your search for several backup companies. Then, you have two options. First, you can enter into an agreement whereby they will provide your items when needed. Second, you can inform the backup company that you may place orders with them in the near future.
2. Prepare a risk management plan
Your risk management plan should identify and assess all the potential risks that could affect your supply chain. This will enable you to prepare for any eventuality.
You need to establish control measures and introduce flexibility into your business process to minimise the impact of any supply chain disruptions. Remember, you cannot plan for all possible scenarios; all you can do is prioritise and prepare for the most likely circumstances that could have the biggest impact on your business.
3. Always maintain supply chain visibility (SCV)
A typical supply chain has several operational stages. Each of these stages has its own risks and challenges. If you are in charge of the company’s supply chain, you will need to be informed immediately once a delay has emerged.
With supply chain visibility, you will be able to determine where your upcoming inventory is located on its journey. You can keep this information exclusively for the supply management team or share it with customers. This practice will enable you to keep track of your orders while quickly responding to unexpected delays.
If you are using a freight forwarder, make sure they provide you with readily available information regarding your shipments. According to this site, you should have 24/7 access to track your inventory’s movement in the supply chain. This will allow you to anticipate any potential delays in your business process.
Another type of visibility involves assessing your supplier’s financial stability. During the procurement process, you must ensure that you review a potential supplier’s financial report. This will enable you to identify financially stable suppliers and reduce the potential for the following risks:
- Bribery
- Corruption
- Financial issues that may affect the production or delivery process
4. Review and update your supply chain risk management
Your supply chain risk management and strategies will only be effective if they are current and relevant to your operations. This means you need to review your supply chain risks at least once a year. You will also need to update them whenever there are significant changes to your business; for instance, if you are working with a new supplier or making changes to your manufacturing or delivery system.
5. Share responsibility with partners
If possible, you should share your supply chain risks with your suppliers and business partners. Aligning your risk management strategies with your suppliers can be beneficial. They may be able to provide unique insights or offer solutions to potential supply chain problems.
Conclusion
A supply chain comprises various stages and a disruption in one area can cause significant harm to your entire business operations. However, you can avoid or reduce the risks by identifying and implementing suitable management strategies. Some of the general tactics you can adopt include having alternative suppliers available if your primary suppliers cannot ship your products on time. You should also create a risk management plan to respond to any potential supply chain disruption. Try to ensure that your strategy includes a reasonable risk assessment and is updated periodically. Furthermore, you can obtain insights and advice from business partners and suppliers regarding possible supply chain problems.
