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Managing Supply Chain Disruptions: Strategies and Best Practices

vijay

Vijay Kumar

Senior Specialist - Marketing @ Shiprocket

December 18, 2023

9 min read

Supply chains are intricate networks made up of several people and corporations. There are a variety of things that can disrupt them, like natural disasters, pandemics, geopolitical instability and labour disputes. In recent times, we have seen how the pandemic impacted every step of the supply chain, from acquiring raw materials to ensuring customer satisfaction. 

Because of this, businesses worldwide are being tested in various ways. Risks and flaws in their supply networks have been put on display. For eCommerce sellers and retail companies to survive, they need to be ready for anything that comes their way. This includes learning how to deal with supply chain disruptions and move past them. 

In this article, we’ll cover why supply chain interruptions happen and provide strategies for businesses to manage and overcome them.

What Are Supply Chain Disruptions?

Anything that hinders the flow of goods or services from manufacturers to buyers is known as a supply chain disruption. It’s a very broad term because there are so many things that cause disruption. Social unrest, labour conflicts, natural disasters, technical setbacks and more.

Businesses that get hit by this kind of disruption can suffer quite heavily. It might result in higher operating costs, lower quality goods being made, an increased shortage in raw material supplies, or delays in deliveries. 

The following are a few basic instances of supply chain disruptions we’ve seen so far:

In 2021, the Suez Canal was blocked for almost a week by the Ever Given cargo ship. This was likely caused by a human error. This caused the Suez Canal to be closed, disrupting world trade on a vast scale and costing more than USD 10 billion per day.

Another recent example of supply chain disruption is the Covid-19 pandemic. The pandemic caused supply chain disruptions in many industries, including healthcare, food, and manufacturing. This occurred due to labour shortages, shutdowns of factories due to quarantine regulations, and delays in transit brought on by the worldwide outbreak. 

Identifying the Origins of Supply Chain Disruptions

It is important to identify the origin of supply chain management to mitigate the risks of supply chain disruptions. Businesses can locate these disruptions by:

  1. Monitoring Key Performance Indicators (KPIs) like inventory levels. KPIs like the percentage of on-time deliveries, etc., can estimate how the supply chain works. Any decline in KPI and other performance metrics can help you find the origin of supply chain disruption.
  2. Another way to track the origin of supply chain disruptions is to conduct risk assessments. Businesses can identify possible indicators that can cause supply chain disruptions and implement risk management measures.
  3. Companies can also use technology to identify the source of their supply chain disruption. Technology and AI, with the help of real-time tracking and inventory management systems, enable monitoring of the flow of raw materials and manufactured goods across the supply chain. This can support companies in detecting and addressing supply chain disruptions on time and mitigate the risks.

Environmental Influences on Supply Chains

The supply chain is a vital part of modern business. However, it can also hurt the environment at every step. The supply chain uses many valuable resources, from sourcing raw materials to transporting finished products. For example, mining for raw materials can damage the environment. Manufacturing products can produce pollution. And transporting goods can release greenhouse gases.

Two of the most concerning environmental influences are greenhouse gas emissions from shipping and ocean pollution. Shipping is a popular mode of transportation in international trade. However, it contributes to the pollution of our world’s oceans. As per an analysis, only 13% of the world’s oceans are left that have not been damaged by human activity.

Strategies for Addressing and Managing Supply Chain Disruptions

You can maintain the profitability and operations of your business even in the event of a disruption in your supply chain by addressing and managing its origin. When supply chain disruptions occur, it is undeniable that numerous factors are beyond a company’s control. However, there are several things that businesses can do to prepare for and mitigate the impact of disruptions.

  • End-to-End Visibility

End-to-end visibility of your supply chain means having a clear understanding of everything related to your products, from sourcing raw materials to delivering the final product to your consumers. Having complete insight into your supply chain allows you to detect and respond to interruptions more quickly and efficiently.

  • Enforce Cybersecurity

By enforcing cybersecurity in your supply chain, you can help to protect your business. Supply chain cybersecurity protects your company from cyberattacks and data breaches.

  • Plan Emergency Strategies

A contingency plan is vital for every organisation, especially when dealing with supply chain disruptions. You can mitigate the effect of a crisis by establishing alternative routes, evaluating suppliers, and considering different shipping and inventory options.

  • Build Up Inventory

Building up inventory is an effective technique to offset the effects of supply chain interruptions. You can continue to keep your business operating even if your supply lines are disrupted if you have the necessary materials. This also involves carefully planning and controlling your inventory to reduce the impact of any crisis.

  • Supply Chain Vulnerability Audit

Conducting a supply chain vulnerability audit is an excellent technique to detect and reduce supply chain risks. This approach includes analysing possible supply chain risks, identifying at-risk links, and creating mitigation solutions.

  • Diversify Supply Base

Diversifying your supplier base is an effective method to reduce the likelihood of supply chain interruptions. You can lower your reliance on a single source and make your supply chain more resilient by having different suppliers from diverse regions.

  • Collaborate with a Logistics Expert

Working with a logistics specialist might be an excellent method to reduce the risk of supply chain interruptions. Finding a logistics professional can assist you in diversifying your supply base, developing inventory buffers, executing contingency plans, and identifying alternate shipping routes or suppliers.

Harnessing Technology for Informed Decision-Making

Use technology to collect, analyse, and interpret data to make informed choices. This can be accomplished through technology, data analytics software, machine learning algorithms, and artificial intelligence (AI).

Technology can be used to identify trends and patterns in data and predict future outcomes based on past statistics and current trends. This data may be utilised to make more informed decisions regarding product development, marketing, operations, and inventory levels.

Businesses can also employ AI and technology to identify potential threats to their supply chains, increase sustainability, and generate loyal consumers. Tech-based and AI-powered solutions can help businesses identify and track merchandise throughout the supply chain, allowing them to make educated decisions about how to return, repair, recycle products, and resolve any issues that may arise.

Constructing Resilient and Sustainable Supply Chains

In today’s world, organisations must prioritise sustainability and resilience. The ability of an organisation to satisfy its current needs while saving the resources of future generations is referred to as sustainability. 

The capacity of an organisation to endure and recover from losses is referred to as resilience. It is critical to recognise that sustainability and resilience may be mutually beneficial. 

Incorporating sustainability into resilience strategies is one method to achieve sustainability and resilience. This entails considering the influence on environmental and social goals while choosing and implementing resilience methods. 

Here are some ways for companies to incorporate sustainability and resilience into their supply chains:

  1. Invest In Renewable Energy Sources

Renewable energy sources such as solar and wind power can assist organisations in reducing their dependency on fossil fuels.

  1. Reduce Pollution and Waste 

Recycling, composting, and utilising energy-efficient equipment can help create resilient and sustainable supply chain practices.

  1. Enhance Working Conditions

This includes providing workers with a fair salary, a safe working environment, and respecting their rights.

  1. Help Local Communities 

This involves employing local personnel and obtaining goods and services from local vendors.

The Consequences of Supply Chain Disruptions on the eCommerce and Retail Sectors

Disruptions in the supply chain can have a substantial impact on the eCommerce and retail industries. The COVID-19 pandemic proved the impact of these disruptions on eCommerce sectors and has highlighted existing vulnerabilities in global supply chains.

These are some consequences of supply chain disruptions on eCommerce and retail stores.

  • Stockouts and product shortages
  • Increased costs
  • Delayed delivery 
  • Reduced economic growth
  • Increased unemployment
  • Decreased customer satisfaction

Building Resilience and Profitability with Shiprocket Fulfillment

Supply chain interruptions provide a significant issue for organisations of all sizes. However, they may be particularly harmful to eCommerce and retail businesses. This is where Shiprocket fulfillment comes in. Shiprocket Fulfillment can help businesses mitigate supply chain disruption risks and build more resilient supply networks. Shiprocket assists organisations in reducing expenses, increasing efficiency, and improving the customer experience by providing an extensive range of services and features.

Conclusion

Supply chain disruptions are a complex and challenging issue with far-reaching consequences. They are a real and growing threat to businesses across the globe. However, there are several steps that companies can take to mitigate the risks and build more resilient supply chains. 

Businesses can create more resilient and sustainable supply networks that can shield them from the harmful effects of disruptions by recognising the root causes of supply chain disruptions and implementing strategies to address them. They can also use the reliable services of Shiprocket Fulfillment to overcome the complexities of managing logistics and supply chain disruptions.

What factors lead to supply chain interruption?

Six factors contributing to supply chain disruption include cyber threats, financial risks, geopolitical factors, man-made incidents, natural disasters, and compliance/reputation issues.

How do you deal with supply chain interruptions?

Determine probable risk factors, prepare backup, analyse and monitor your supply chain data, implement automated technologies to assist in the management of interruptions, and form several supplier connections.

What are supply chain strategies for disruptions?

A supply chain strategy is a comprehensive plan for planning, designing, executing, controlling, and monitoring supply chain operations. It directs efficient operations and initiates activities that meet key performance indicators.

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