If you have gone car shopping lately, you might have asked why the vehicles are more expensive than the manufacturer’s suggested retail price (MSRP). Maybe you’ve also noticed several menu items at restaurants, coffee shops, and bars have been unavailable lately. It used to be an issue with your regular supplier or a particular market like the chip shortage.
Thanks to COVID, the entire supply chain has been disrupted and has shown us how fragile the supply chain system is. It’s so prevalent that there are several memes about it, and “supply chain issues” have become a common punchline for jokes.
Large companies have weathered this better than most, but they still aren’t immune.
Where does that leave small to medium-sized businesses during the supply chain crisis?
There’s no time machine. Yet intelligent leaders know to learn from not only their experiences but from others and take steps to avoid similar situations in the future. Don’t fall into the trap of thinking this supply chain crisis was a once-in-a-lifetime occurrence.
While our firm handles the communications around business disruption, here’s some advice based on what we’ve seen on how to safeguard your company from supply chain hiccups in the first place.
Seven Strategies
So here are seven strategies for being proactive and developing business resilience to limit your risk for the next “Big One” in the supply chain.
1. Having A Contingency Plan
Your organization has a crisis management plan, right?
If so, does it include emergency scenarios on the level of a supply chain disruption?
When you go through your crisis management strategy, ask yourself: “What if our suppliers can’t deliver us parts? What’s our backup plan?”
If you don’t have a plan at all, start building one now.
2. Business Impact Analysis (BIA)
If it’s not yet part of your organizational crisis management process, add it ASAP. It’s one of the most undervalued business continuity-related tools.
A BIA works like this:
- Identify the potential weakest links in your supply chain.
- Prioritize them based on risk.
- Take action to reduce that risk.
You may start with something small, but it’ll grow over time.
3. Having Multiple Suppliers
No single business should depend on one supplier for critical components.
Having multiple suppliers for essential items is the first step toward resilience. Build out your bench!
Working with multiple suppliers may increase cost and complexity, but you’ll be less vulnerable to disruption. Having access to inventory when others don’t is a huge ROI.
4. Raising The Supplier Selection Criteria
Look at your suppliers’ resilience. Like looking at a vendor’s labor or data & security practices, you should consider their ability to handle a supply chain issue.
Can they handle a crisis? Are they aware of disaster management practices? How would the business operate if there was no power or transportation for two days?
5. Review Your Supplier Contracts
Do they have a business continuity clause? What would you do in case of disruption with one of them? How would the contingency plan work in practice, and who are the stakeholders involved?
These are all critical questions that should be answered by now. If they’re not, it’s time to update them.
6. Nearshoring
Having facilities closer to your business means worrying less about importing and foreign policies. The closer to home a supplier is, the more accessible and responsive they can be when you need them most.
7. Safety Stock Management
It’s a balance between just-in-time and carrying excess stock. Having too little may cause problems, but having too much inventory also has costs associated with it.
The key is to find the optimal level, which can be achieved by implementing effective safety stock management practices.
TLDR? Click here for a free 15-minute consultation or call us at (310) 396-8696 to learn how we can protect you from emerging issues to keep your business safe and functioning.
Gillott Communications is a Los Angeles-based public relations firm that specializes in high-stakes Crisis & Reputation Management with more than 50 years of expertise in strategic communications, corporate public relations, and working with the media.
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