The global supply chain crisis started back in 2020 when the entire world was forced to shut down due to the COVID-19 pandemic. The Guardian said it perfectly in one of its news reports where it stated that the pandemic had caused the perfect storm for the supply chain crisis. According to that report, the pandemic led to the formation of cracks in an already vulnerable supply chain.
The Guardian then, in late 2021, echoed the warning of experts suggesting that this crisis could last another two years. That means by the end of this year – 2023 – things would go back to normal, at least to some extent. Unfortunately, this no longer seems to be the case.
J.P. Morgan’s research unit claims that the ongoing Russia-Ukraine conflict is largely to blame for hindering the progress of the recovery of our global supply chain. That and the rising tensions between the US and China are contributing factors to the current deteriorating state of the supply chain.
However, businesses must carry on with their operations despite the crisis, and for that, they need to learn how to best adjust to it. In this article, we’ll highlight some of the most effective ways you can help your business adjust to this ongoing global supply chain crisis and survive it.
Diversify Your Supply Chain
One crucial step to mitigate the global supply chain crisis is diversifying your supply chain. Relying on a single source for materials or products can leave your business vulnerable to disruptions. Consider sourcing from multiple suppliers, both local and international, to reduce dependency on a single region.
Evaluating alternative suppliers, building relationships, and maintaining open communication will help you secure the necessary resources and reduce the impact of any single-point failures.
Enhance Inventory Management
Optimizing your inventory management is vital during times of supply chain crisis. Conducting a thorough analysis of your inventory levels is also a crucial part of this process. This will help you identify critical items that are prone to scarcity and require urgent stocking.
Implement just-in-time inventory practices to avoid excess stock while ensuring you have sufficient buffers for critical components. Collaborate closely with suppliers to receive accurate forecasts and establish safety stock levels to buffer against uncertainties.
Explore Local Sourcing
The global supply chain crisis has exposed the vulnerability of long, complex supply chains. Consider exploring local sourcing options to reduce lead times and transportation costs. Collaborating with local suppliers can help you build more resilient supply chains while also contributing to the local economy. Evaluate the feasibility of reshoring or nearshoring certain operations or sourcing strategies to enhance your supply chain stability.
Work with a 4PL Service Provider
4PL services follow a logistics model where an outside supplier is tasked by a manufacturer to oversee the whole management and organization of their supply chain and logistics. This third-party service provider looks after everything from the design of the supply chain to how various components of it interact with one another throughout the process.
According to Red Stag Fulfillment, when you work with a 4PL service provider, you’re handing over your entire supply chain operations to experts who have better and more advanced resources to assemble and manage those operations. In doing so, you no longer have to worry about the supply chain crisis because it’s their responsibility now, and they are in a much better position than you to navigate the crisis, even if to some extent, thanks to the resources and supply chain knowledge they have.
Invest in Technology and Automation
Embracing technology and automation can significantly enhance your business’s ability to adapt to the supply chain crisis. Implementing advanced supply chain management systems, such as real-time tracking and demand forecasting tools, can improve visibility and enable proactive decision-making.
In addition to all this, you must also explore opportunities for process automation, robotics, and artificial intelligence to streamline operations, reduce dependency on manual labor, and improve overall efficiency.
Strengthen Supplier Relationships
Strong supplier relationships are crucial in times of crisis. Regularly communicate with your suppliers to understand their challenges and discuss potential solutions collaboratively. Explore opportunities for long-term partnerships and negotiate flexible agreements that accommodate changing circumstances.
Investing in mutually beneficial relationships with suppliers can help secure priority access to resources and strengthen your position during disruptions.
Adapt Communication and Customer Expectations
Transparent communication with customers is essential during the supply chain crisis. Proactively communicate any potential delays, changes in availability, or price fluctuations to manage customer expectations. Provide regular updates and alternative solutions to minimize dissatisfaction.
By demonstrating a proactive and customer-centric approach, you can foster trust and loyalty, even during challenging times.
There’s no telling when this ongoing supply chain crisis will see its end, but there’s no point in waiting for it to reach that state. Instead, stick to the suggestions discussed above so that you can adjust your business strategies accordingly and make it out of this crisis with your business in one piece.