Times of inflation and financial turmoil can greatly affect company supply chains. With fluctuating demand levels and uncertainties regarding access to suppliers based on country relations, companies need resilient supply chains. Here are five practices for supply chain resiliency to help you stay afloat during these crazy times.
1. Audit your supply chain
The first step is to conduct a detailed audit. Who are your suppliers, what country are they in, and what is the importance of each supplier? Can any of them be eliminated from your processes without affecting your profits to a high degree? Also, determine which of your suppliers are open to being flexible and will adjust according to demand levels, since demand fluctuates greatly in these hard to predict times.
2. Stay flexible
On the topic of flexibility, you want to make sure everyone involved in your supplier network and in your company can respond to unexpected events that occur within your supply chain. Have meetings to discuss and update plans so everyone is prepared ahead of time. Go over the situations that will require your network to be flexible, and ensure everyone understands, and is comfortable with the degree of flexibility that is needed.
3. Find cheaper alternatives for materials
No shipper wants to sacrifice quality for a cheaper price. However, there are many situations where you can find cheaper alternatives for certain materials without affecting the quality of your products. Now is the perfect time to start seeking out alternatives if you can. It’s good to get a head start and conduct rigorous testing and research before introducing new materials to your production processes in order to avoid road bumps ahead.
4. Keep your stock in check
Inventory management is always tricky during times of inflation, especially during times when it is also hard to predict customer demand. That is why you need to keep a close eye on your inventory levels at all times. A good way to do this is to use a transportation management system (TMS) that has intelligent inventory tracking features that allow updates in real time as inventory enters and leaves your warehouses. And remember, you do not want to keep too much inventory on hand when there is less demand, especially if you specialize in perishable goods, or goods that quickly become obsolete like consumer electronics.
5. Run simulations of your supply chain in different scenarios
To better prepare for disruptions, you can run different supply chain simulation scenarios to see what events will affect your profits the most. Create a pie chart showing the various products and services where your profits come from, and the percentage of total profit you gain from each. Then, for each of these areas, define and simulate supply chain disruptions that could reduce activity and profits. This will allow your team to devise resiliency strategies and contingency plans.
Keep cycling through these five steps and responding to changes as events unfold. This is how you can develop and sustain a resilient supply chain.
Author Bio:
Zara Raza is a Digital Marketing Specialist at Turvo Inc., a cloud-based, collaborative transportation management system to modernize the supply chain. Turvo helps 3PLs, freight brokers, and shippers improve and automate logistics and supply chain processes with a scalable TMS.