One of the biggest lessons businesses learned during the 2020 pandemic was how fragile their supply chains really were. Many businesses folded, not because customers did not have access to a company’s offering, but because companies could not sell their products. Fortunately, there is much you can do to prevent the same from happening to your business. Below are 5 ways you can keep your supply chain safe from disruption.
1. Have Multiple Manufacturers and Suppliers
No manufacturer or supplier is truly stable. Something social, political, or environmental can affect them, and in affecting them, destabilize your company. Even a large supplier could be cut off from working with you should the political winds shift. Take a look at where you get the components for your offering. See where you rely only on one manufacturer and find a way to get multiple sources for your company.
2. Put Emphasis on Capital Management
The truth is that even the most prepared businesses can have their supply chains disrupted, despite their best efforts. That is why you need to prepare for the worst as well, and the best way to do that is through strong capital management, specifically knowledge on your cash conversion cycle. Knowing how quickly you can convert inventory into cash can help you manage issues if you are unable to acquire more products to sell, for whatever reason.
3. Get Involved in Tech
Gone are the days when people need to manually manage product inventories. Now, technologies exist that will allow you to manage your inventory with a single button, allowing you to get a precise and up-to-date accounting of your products. Many businesses forget or intentionally forgo investing in such technology, much to their detriment. They can end up with product shortages that cost them sales simply because they could not check briefly how much they had available. Those companies also end up losing money from lost inventory and being unable to track exactly when that inventory was lost. Invest in the right tech, and you will invest in your company’s future.
4. Making Risk Management a Priority
Every part of the supply chain contains risks – from gathering the materials for your offerings to delivering the product to your customers. Suppliers can get cut off or your delivery services may hiccup. Whatever the risks are, you should know about them. Sit down with your team periodically and study your supply chain. Take note of what risks are present at every step and take action to alleviate those risks.
5. Whenever Possible, Stock Up on Inventory or Raw Materials
One of the best ways to defend against supply chain disruption is to have your supplies on hand as much as possible. That way, if manufacturers or suppliers hiccup, you at least have some inventory to survive while they settle their issues. What you keep on hand could be anything from completed products to raw materials, depending on your manufacturing process.
Properly managing your supply chains and making them resistant to disruption has never been more important. It does not matter what industry you are in or who you are targeting – you have competition. Being better prepared than the competition might even open new opportunities when the next disruption comes around.