In early 2022, many businesses and manufacturers faced potential workforce strikes, threatening another supply chain nightmare much like what the pandemic caused. Fortunately, normal operations resumed for most businesses but many companies were left concerned and wondering how they could lessen the blow of supply chain issues in the future. The key to ebbing potential supply chain threats, if not to avoid them altogether, is to consider supply chain management as a part of your business’ entire risk management plan.
First, it is important to understand how supply chains can be negatively impacted. Strikes could result in a shortage of stock as the production and shipping of product would slow. Or financial instability as some businesses don’t have the working capital to maintain adequate inventory levels which can cause a shortage of goods. In addition, many businesses are faced with employee turnover, resulting not only in scheduling issues but in more time spent hiring and training replacements.
Whether your business is in the throes of a messy manufacturing and supply chain ordeal or worried about a future debacle, now is the time to build out a strong risk management plan that will help avoid supply chain shortages and de-escalate their effects.
The Next Best Step
Complete an internal supply chain assessment to identify where the bottlenecks are as well any other problems or potential problem areas. Assess if you have enough suppliers and if you need to diversify their geographic locations in case of natural, political or economic disaster. Look at inventory levels and consider what raw materials are crucial for production.
One of the best ways businesses can assess their supply chain is to create a strong supplier development program featuring an evaluation system. This evaluation must ask questions, including:
- Are suppliers on time?
- Are they cost competitive?
- Are they investing in new tech and equipment?
Once finished, this assessment should provide your business with the information you need to fix, adjust and fill in the gaps.
Think Big Picture
There are other key business strategies to minimize supply chain risk. This can include bringing on additional capacity through equipment purchases or an acquisition of a key supplier or competitor. Also, do not forget about consistently communicating with suppliers and customers on supply chain issues and focusing on improving forecasting data used for planning.
Unsurprisingly, cybersecurity is a huge area that is overlooked; any downtime within the IT and cybersecurity field is one step closer to a security fiasco, as your IT operations connect you to your customers, suppliers, manufacturers and internal team. Other areas like day-to-day financial operations and human resource management also tend to get bogged down and leave many businesses feeling stretched thin.
Relying on a third-party partner to provide outsourcing and risk management resources can save your business time, money and stress when supply chain issues come knocking. Suggested steps:
- Hire a 24/7 IT managed service provider to manage your security and protect your business from external cyber threats.
- Bring in a fractional CFO to support ERP system improvements and inventory level analysis.
- Supplement your HR department with employment enhancement projects that identify whether your business is creating the best work environment for your team.
Supply chain issues will come but your business can be prepared with the right tools and the right team behind you. Assess the problem areas, invest in the right expertise, act immediately where possible and create the ideal risk management plan that will keep your mind at ease.