The supply chain is like a well-oiled machine when everything is going well. A customer goes into a retail store, finds the product they want, chooses options like colour, size, and brand and then buys the item off the shelf. If purchased from a website, the customer places the order on the e-commerce store and receives a delivery usually within a few days.
But when the supply chain is disrupted by events like floods, fires, freight delays or events like the Covid-19 global pandemic, the availability and consistent supply of items is suddenly severely impacted.
When supply chain disruptions occur, it’s mostly out of the control of retail businesses.
There are six main types of supply chain disruption:
1. Pandemics such as COVID-19
2. Natural disasters, including fires and floods
3. Transportation delays caused by strikes and container shortages
4. Product delays due to component shortages and quality issues
5. Price fluctuations caused by exchange rates movements and increasing fuel costs
6. Cyber-attacks and company and infrastructure security threats
Having a contingency plan for your supply chain is a great idea to mitigate potential risks and losses.
Here are six things you need to consider in planning for supply chain disruptions:
1. Have an emergency plan
Make sure you consider all scenarios and come up with different solutions and contingency options. Don’t forget to document it and make it as detailed as possible so anyone in the team can refer to it and implement it when needed.
2. Evaluate the market
Speak with suppliers, partners, and other businesses to determine what may affect your operations. It’s also good to keep yourself updated with the latest news so you can anticipate and prepare for potential issues.
At Leading Edge, our Category and Essentials Members have 24/7 access to a noticeboard to connect with our team and other businesses, ask questions and discuss industry news and trends such as supply disruptions.
3. Build up your stock inventory
During unpredictable and volatile times, you don’t want to be unprepared. Find out what your target audience is looking for and stock up on marketable, on-trend or best-selling products.
4. Identify backup and alternative supplier options
For a small business, we know this may be easier said than done. That’s why we provide our Category Specialist Members access to our extensive supplier network featuring local and global brands, manufacturers and distributors. Our team works hard to source high-quality products at competitive products.
5. Diversify your supplier base or source from different regions, states, or countries
Cliché as it may sound, don’t put all your eggs in one basket. Having several suppliers in your roster will minimise disruptions to your business in case one or two of them encounter supply issues. Find reliable companies from different locations and build a good business relationship with them.
6. Ensure you have a reliable logistics partner and look at alternative options
You need a logistics partner with a good track record to make sure your customers get good service from end to end. Though delays may be out of anyone’s control, your delivery company should proactively communicate with the customers.
Our members can find a range of trusted freight companies on Elle, our easy-access platform, and access discounts, special offers and exclusively negotiated rates.
What do you do if you have supply chain issues, and what are the lessons learnt
1. Communicate with your customers and let them know what’s going on.
2. Activate your supply chain emergency plan if you have one.
3. Check your inventory levels and build up stock levels on key items.
4. Be across new opportunities, and source the items people want to buy.
5. Watch your cash flow. Remember, cash is king. If you run out of cash, you are out of business.
6. Monitor the market for the end of supply issues. You don’t want to be overstocked when everything normalises.
Supply disruptions happen all the time but usually only cause minor inconveniences. By having a detailed plan with alternative supply solutions, diversification and good cash flow, you can mitigate the impacts on your business even during unprecedented times.