How To Handle Supply Chain Disruptions
Two years into the pandemic and New Zealand businesses are no stranger to supply chain disruptions. But with the new Omicron variant sweeping the globe, we’re clearly not out of the woods just yet.
If the current events in Australia are any indication, we’ll be facing even more significant supply chain issues in the coming months.
That may be a daunting prospect for small businesses already struggling to manage their logistics, but it doesn’t have to be a disaster.
With proper preparation and a bit of creative thinking, businesses can minimise the effects of supply chain disruptions.
Not sure how to do it? Well, read on and we’ll share some simple tips and strategies to help you plan for the worst.
Tips For Managing Supply Chain Disruptions
Supply chain disruptions due to COVID-19 have impacted every industry and country in the world.
At the beginning of the pandemic, the issues were more related to the logistics of accessing products from badly affected nations. While that’s still a factor, there are many more complications to consider.
Currently, labour shortages due to quarantine and lockdown are affecting the manufacture and transport of goods around the world. In Australia, a third to half of the country’s truck drivers are off work, and supermarket chain Woolworths state that more than 20% of distribution centre staff and 10% of store workers are absent.
Regardless of the reasons, supply chain disruptions are another challenge for already struggling businesses. Here in New Zealand, we have a little leeway and can learn from watching how businesses in other countries handle their supply chain issues.
The best way to tackle them is to be prepared and plan ahead. Here are the most important strategies to consider:
1. Track Your Stock Carefully
If you’ve been meaning to improve your inventory management systems and processes, now is the time to do it! You need to know precisely what you have in stock and what you need to procure.
Investing in a good digital inventory management system can help you stay on top of this without requiring too much extra time and energy.
2. Stock Up on Inventory
It makes sense to order more inventory than usual, so you have plenty on hand to see you through any supply chain disruptions. If possible, order enough stock to last at least the next six months.
This may be difficult for some businesses due to budget issues or lack of storage space, but consider exploring solutions to enable you to stock up. You could seek financing to help you make a bulk purchase, expand your storage space or rent extra.
3. Research Alternatives
Prepare for the unexpected while hoping for the best! Products that are easy to come by may not be so obtainable in the future. Determine your most essential stock items and make a list of alternative suppliers - in different locations than your original supplier, if possible.
Contact these alternate suppliers, shipping and logistic companies now to begin building relationships. This will make it easier to switch over if you need to.
At the same time, consider what alternative products you could offer to customers if you are unable to get your usual supplies. Are there items that are easier to get that you could focus your business on in the meantime?
4. Embrace Supply Chain Management Tools
Many larger organisations use supply chain management (SCM) software to streamline their logistics. This software helps you track inventory, manage shipping, and stay updated on your supply chain in real-time. With the current issues we’re facing, small businesses can benefit from these digital tools too.
5. Communicate with Your Customers
Consumers are generally understanding of supply issues and delivery delays. However, they’ll be more supportive if your business is transparent about the disruptions. Be clear about potential delays, and let them know that they may need to order from you well ahead of time.
6. Be Proactive and Stay Informed
Don’t sit around and wait for supply chain disruptions to impact your business: stay up to date on the situation globally so you can anticipate how you’ll be affected.
The better you’re able to anticipate a shortage, the more time you have to develop a solution. Take steps to clarify how your supply chain works at every stage, and stay in touch with your suppliers.
7. Anticipate Demand
Sit down and do some forecasting for your business. Use data from the last few years to try and anticipate the demand for your products, and order what you need accordingly.
8. Fine-tune Your Budget
Supply chain disruptions can hit hard financially. Your products may become more expensive to acquire and transport, and you may need to find the funds to do a bulk buy or pay for extra storage.
With all that in mind, it’s a smart move to come up with a solid financial strategy and backup plan for those worst-case scenarios.
9. Get some help
You don’t have to try and tackle these difficult situations alone.
If you need some help reviewing your finances and looking at your options, Figuration can help. We offer bookkeeping, accounting, and consulting services to help you develop, improve, and grow your business to achieve success – pandemic or no pandemic.