As far as the economy is concerned, one of the biggest shocks of the COVID-19 pandemic was the massive disruption it caused to global supply chains.
With everything from factory closures to countries closing their borders forcing a slow down in production and shipping, businesses around the world found that, even when they could trade, they couldn’t always get hold of the goods and materials they relied on.
Overall, according to Accenture, three quarters of businesses saw trade suffer as a result of supply chain disruption. And while we might have moved past COVID restrictions, the after effects are still being felt in many supply chains.
Knowing you can get hold of stock to meet demand is key to returning to any kind of stable footing as a business. So how can you ease those supply chain anxieties that have dogged the past few years? Here are some top tips to consider.
Diversify suppliers
If the COVID-19 pandemic taught us anything, it was that relying on just a single supplier is not great business strategy. This lesson was even writ large at the macroeconomic level of international trade, with decades of reliance on China as the world’s primary producer brutally exposed when Beijing effectively closed for business during the early months of the crisis.
Working with multiple suppliers is not to show disloyalty to a long-trusted partner. It’s just a basic failsafe strategy – if something goes wrong with any area of your business’s operations, it makes sense to have an alternative ready to ensure continuity.
Increase stock piles
Lean business theory has had a major influence on supply chain strategy over the pat couple of decades. It tells us that the most efficient way to operate is to only hold as many goods and materials as you need at any one time, to save on the costs of storage etc – Which is all well and good, until that delivery of stock you need ‘just in time’ doesn’t show up.
According to McKinsey, 61% of companies say they plan to increase inventory of critical products in the wake of the pandemic, and 42% say they plan to raise stock piles across their supply chain. There have even been stories of major retailers buying up additional warehousing space to do so. Yes, it brings additional costs. But post-COVID, you can see that as an investment in resilience.
Invest in inventory management
Intelligence is always a highly effective weapon when it comes to fending off challenges. If you want to head off problems in your supply chain before they happen, data (and data analytics) are your friend.
The latest cutting-edge inventory management software platforms don’t just track stock levels and automate reorders. They are capable of collecting huge volumes of data from across supply chains, and use sophisticated techniques like predictive analytics and AI to run models that highlight the safest, most secure and most effective ways to meet demand going forward, even taking into account worst case scenario disruptions.
Diversify products
You can look for different suppliers who can supply the same product. But what if you run into brick walls at every turn? Another strategy is to think about extending the range of products you offer. Just as it makes sense not to rely on too small a pool of suppliers in case of disruption, why take the risk with a small product range?
Introducing new product lines can feel like a big decision for any business. But being on the look out for new opportunities and new revenue streams is generally a good strategy for any business looking to be agile and resilient enough to ride out challenging times.
Bring supply closer to home
Finally, it would be premature (if not plain foolish) to suggest that the pandemic represents some kind of turning point in the tide of globalisation. Given advances in communication, travel and technology, it’s hard to imagine any scenario in which the modern ‘global marketplace’ dwindles.
But what the pandemic has done is make us take pause after what feels like a decades-long gallop to offshore and outsource everything in sight, with few questions asked. According to McKinsey, 90% of supply chain decision makers are looking to increase operations within their own local region in the next three years. The nearer you can source goods and materials from, the less prone to upheaval (though not by any means bullet proof) your supply chains are. It also has other benefits such as helping to reduce carbon footprint etc.
