Whether you’re a small business owner or a large corporation, supply chain issues are all around us. The good news is that these problems aren’t permanent and you can take steps to minimize them.
A supply chain consists of the raw materials, goods and services needed to design and produce a product. It also includes the logistics of getting those items to customers, which involves warehousing and distribution. It’s a complex system that can be affected by a variety of factors including a change in global politics, natural disasters and climate events, supplier reliability and economic shifts.
The COVID-19 pandemic wreaked havoc on many businesses’ supply chains, creating logistic bottlenecks that stalled the flow of products. Now, the Russia-Ukraine conflict and a global financial slowdown have further exacerbated supply chain issues. In addition, labor shortages and rising interest rates are causing price spikes that make it harder for companies to maintain profitable margins.
Supply chain managers should look for ways to reduce lead times, improve supplier relationships and develop backup routes in case of an interruption. This approach can help reduce inbound material costs, lower shipping expenses and ensure that your company can quickly adapt to unforeseen challenges.
It’s also important to diversify suppliers, and perform due diligence on them each year, to mitigate the risk of a single supplier becoming unavailable. Maintaining strategic inventory buffers can also help you avoid the dreaded “out of stock” label that can impact customer satisfaction and your bottom line.