Supply chain stress. Three words that are facing businesses globally – from car manufacturers to silicon suppliers, the modern supply chain faces significant headwinds.
From price inflation, to supply shortages, to simply not having adequate staff at work, what can businesses do to meet customer needs, while dealing with supply chain stressors? Let’s explore some of the possible solutions to the supply chain crisis, and how you can use them to get the most out of your business.
Talk To Your Customers and Keep Them Updated
First and foremost – communication is critical. Whether a product is on time or delayed, communicating in a timely fashion with stakeholders can reduce stress and improve confidence in the supply chain.
Sometimes, finding the right words to communicate to stakeholders can be difficult. Simple queries can often turn into complicated answers – such is the life of the supply chain. A course like the Masters of Supply Chain Logistics online may provide the skills to adequately communicate with stakeholders.
Keep an Eye on Costs
It’s important to understand the impact of supply chain stress on products. An often noted element of inflation is the effect of rising labour and material costs on end products. While a 10% price increase may not seem like much at a supermarket, for products worth potentially billions of dollars in a supply chain, this can represent extreme cost fluctuations and pressures. In some industries, such as construction, these recent cost fluctuations have resulted in the financial ruin of building and construction companies across Australia.
It’s therefore critical for logistics managers to be mindful of costs in their supply chain – and adapt as necessary. That may involve steps such as switching to sea freight instead of air freight, so it’s important that if these result in potential delays, customers are advised.
Plan for Redundancy in Your Supply Chain
Having a single supplier can often increase the risk of a supply chain failure. A classic example of this remains the Takata airbag crisis, affecting more than 50 million airbags in the US alone. Whether it be a single warehouse or a single supplier, the risk is amplified when there’s one potential point of failure.
Additional redundancy in the supply chain is a crucial element of any modern-day supply chain, so much so that even modern smartphones such as the Samsung Galaxy S22 have differing core components across regions.
Don’t be afraid to approach multiple suppliers to stock products – especially if the product line you wish to sell is a high-volume product. At the end of the day, to satisfy the needs of the customer, supplier redundancy may be essential. While a supplier may dislike that you have multiple product sources, what’s worse is a customer who decides they no longer wish to purchase products from you because your supplier can’t supply them.
Forecast Appropriately - it’s Essential
In a low-supply environment, it can be difficult to adequately stock products to meet customer demand. However, it’s more important to adequately stock products – after all, nobody wants a repeat of the great toilet paper supply shortage of 2020.
For a logistics manager, it’s important that forecasting is done in an appropriate fashion. Ensure you’ll have enough space on hand to store the stock – after all, ordering too much product can result in overstocks – not ideal for any business.
Get a Grip on Your Data - Don’t Lose Control
Finally, it’s important to appreciate the role of data in the modern logistics environment. From shipment tracking to inventory management, it’s essential that logistics managers understand the inputs and outputs of the supply chain.
Understanding the logistics data within your business is a great way to manage supply chain stress – by keeping accurate and timely records, businesses can identify what stock is on hand, in transit, and so on. It’s also a great auditing and control measure – if you’ve ordered a product and only some of it has arrived, cost reconciliation may be an option (and a great way to save money in the process).
Overall, understanding the various quirks of the supply chain is an essential facet of modern logistics management. It’s important that if you’re not currently exploring these issues with your logistics team, to bring them up – you never know what you’ll find in your supply chain.