5TypesofglobalSupplyChainDisruptions
Not all supply chain disruptions are created equal. As Dr. Novack explains, “There are
many different types of supply chain disruptions. When you look at a disruption, there are
two things you have to look at: 1) what is the probability and 2) what is the severity.” This
will vary depending on your supply chain and your industry.
Here are some of the reasons your supply chain might see an impact.
1.Pandemics.
We’ve seen in recent weeks and months how COVID-19, the novel
coronavirus outbreak, has impacted global supply chains. The effects of global pandemics or
other public health crises can have massive supply chain impacts because of the number of
people, regions, and global companies affected which can upend normal operations at every
stage of the production line.
2.Naturaldisasters.
On March 11, 2011 an earthquake struck off the Pacific coast of Japan causing a
tsunami which in turn led to a nuclear disaster at the Fukushima Daiichi Nuclear Power
Plant. The catastrophe affected many businesses and the global economy, temporarily
shuttering those that reportedly produced 22% of the world’s supply of 300-millimeter
silicon wafers (a necessary component in semiconductors) along with 60% of certain
necessary auto parts.
Natural disasters like this one or hurricanes, tornados, wildfires, or floods aoften draw
attention to supply chain dependencies in the affected areas. Even a localized disaster can
have far reaching implications in the supply chain depending on where it is.
3.Transportationfailuresanddelays.
Globalization and increased trade has made it more and more common for supply
chains to include international suppliers. A result of this is increased business opportunities,
but also increased strain on international and domestic transport networks which has led to
congestion and delays.
While transportation delays can happen in the best of times, other supply chain
disruptions can compound these problems. For example, natural disasters can prevent
transportation and trade routes through affected areas. Or in the case of the COVID-19
pandemic, many countries and regions instituting lockdowns to avoid viral spread is making
it more difficult for freight carriers to deliver goods by land, sea, or air slowly the movement
of even vital products.
4.Productproblems.
Quality management goes hand in hand with supply chain management, as issues with
products at any stage in the chain can lead to issues and delays in the final product. No
business wants to send sub par merchandise to customers or have customers’ shipments
delayed because of faulty products, so creating a good quality management system
with customers expectations in mind, and communicating that to all suppliers is important.
5.Pricefluctuations.
Price changes for suppliers in your chain can also create disruptions as you may have to
make a decision on whether or not to switch suppliers, raise your own prices, or see your
profits reduced by eating the costs yourself. Price fluctuations can be caused by any number
of factors. For example, prices on commodities like crude oil are notoriously volatile and can
have a big impact on the financial overhead of a number of manufacturing and
transportation factors.
6.Cyberattacks.
Cyber attacks can occur to any business at any time who has not adequately protected
themselves. Your supply chain can also inadvertently open you up to attacks. If any link in
your chain has lax security protocols, that may be an opportunity for hackers to get access
to your data.
This is what occurred in 2014 when superchain Target experienced a major security
breach that was originally started though a hack in their HVAC partner though a phishing
scheme. The chance of your supply chain being disrupted by cyber attacks or leading you to
be attacked yourself, make it very important to have strong communication and
relationships with all links in your chain and know where any vulnerabilities may lie.
7TacticsforPreparingforSupplyChainDisruptions
They say the best offense is a good defense, and that’s certainly true when it comes to
managing your supply chains. You probably won’t get much advance notice about
disruptions to your supply chain, so it’s a good idea to make sure you plan ahead for any
eventuality. Here are a few things to consider while creating a strategy for managing supply
chain disruptions.
1. Create a supply chain emergency plan.
2. Build up inventory.
3. Conduct a supply chain vulnerability audit.
4. Identify backup suppliers.
5. Diversify supply base.
6. Partner with a logistics expert.
7. Adopt risk evaluation tools.
1.Createasupplychainemergencyplan.
It’s always good to have a backup plan, especially when it comes to supplies. When
creating an emergency plan, you should think about all the different ways you can move
goods around and consider setting aside an emergency budget that can be used in case of
disruptions.
2.Buildupinventory.
Create a stockpile of essential supplies that can see your business through several
months of disruption. This might mean having a store of finished goods, components or
even raw materials whatever you might need to maintain your business if your supply
chains are temporarily cut off.
3.Conductasupplychainvulnerabilityaudit.
Take some time to do a risk analysis and see where the weakest links in your supply
chains are. This will help you focus on where you need to find alternatives. It can also be
helpful to assess potential environmental, social, and political conditions that may impact
your supply routes.
4.Identifybackupsuppliers.
Look at what other suppliers can provide what you need if your current supplier can’t
get your goods to you. This will probably mean identifying suppliers in other geographic
locations and building a relationship with them so that they can step in when you need
them.
5.Diversifysupplybase.
Like an investment portfolio, a little diversification in suppliers can be a good thing. By
setting up your supply chain so that you have suppliers in different places, you can ensure
that you’ll always be able to get at least some goods amidst any disruption.
6.Partnerwithalogisticsexpert.
Find a fulfillment and supply chain expert that can step in to support you when
disruptions happen. They should be able to help you locate alternative courier solutions and
help you understand how to deal with disruptions and navigate fees and surcharges.For
example, Easyship integrates directly with BigCommerce and can provide global logistics
support through their easy-to-use platform that allows users to show delivery lead time and
taxes and duties at checkout, which can go a long way in helping you manage customer
expectations during disruptions.
7. Adopt risk evaluation tools.
Use technology to evaluate potential threats to your supply chain. Try AI-enabled
mapping and environmental analysis solutions, aggregate apps that provide geopolitical
overviews, and systems that can evaluate cyber threats. Even social media can be used as a
predictive tool to identify potential shortages and disruptions.
Steps to Take When a A Disruption Has Occurred
Of course the above is great for planning ahead longterm, but what happens if your
supply chain is currently disrupted and you’re figuring out how to solve issues and continue
to move forward in the short term? In this section, we’ll look at the more on-the-ground,
crisis management solutions you can take to solve for evolving supply chain disruption
issues.
1. Communicate with customers.
Being transparent with customers is essential to get through these times. If you are
upfront about the delays and the reasons for them, your customer base is more likely to be
understanding.Kristina Lopienski, Sr. Content Marketing Manager at ShipBob, recommends:
“If you are low on stock, limiting purchase amounts, or have modified shipping speeds,
share that on your site or over email early and often.”And communication shouldn’t stop
with customers, Kristina adds: “Over communicate, which happen to be rule #1 when
working remotely too. Communicate consistently to your customers, to your distribution
partners, to your team.”
2. Evaluate all critical components of the supply chain.
Figure out what you absolutely need to continue operating going forward and the origin
of their supply. Look to establish alternative suppliers for critical parts and products
firstAccording to Karl Siebrecht Co-Founder and CEO of FLEXE, a warehousing and fulfillment
solutions provider, this evaluation process should encompass not just the businesses in your
supply chain, but every aspect of your business:“When your business is disrupted, it is
critical to take a step back and clarify what is most important to optimize for. Is it employee
well-being, customer satisfaction (and for which segment), near-term cash flow, or
something else? In a crisis, it is likely you’ll have to make some very tough trade
offs.Developing decision-making criteria that can be consistently applied will clarify issue-by-
issue decisions. Once you’re on the other side, identify key insights for the next time,
because the unfortunate reality is that disruptions happen. So when they do, know your
options.”
3. Estimate available inventory.
Generally, you should have a good account of your available inventory at any given
time; however, it’s particularly important at times when your supply chain is disrupted. You
may want to do a physical inventory and audit of not only what finished products you have
available, but also what components and spare parts are available that can keep production
running.
4. Assess buyer behaviors.
some supply chain disruptions are also compounded by changes in demand. For
example, a global pandemic or far-reaching natural disaster can change what and how
consumers are purchasing. Keep track of how changing buying behavior is affecting which of
your products customers are seeking.
