8 ways to manage supply chain disruption

Maintaining an agile and well-oiled supply chain is one of the most important aspects of running a business, and with the UK’s current economic and logistical situation, it’s now more challenging than ever before. Building a contingency plan can help you to handle material shortages, inflation and lorry driver shortages, so here we look at some of the practical tips you can put in place to manage supply chain disruption.

1. ) Create a supply chain strategy

Your supply chain strategy can be pivotal in managing any potential disruption, so make this as robust as possible. Start by outlining what your business goals are and build your strategy from there. If you’re committed to delivering 95% of your deliveries on time, then consider which processes you could put in place earlier in your supply chain to help achieve this. Some areas of focus could be how you source materials, your manufacturing process or your distribution network.

In addition, consider leaving a time buffer in between supply chain stages to help account for late deliveries or unexpected increases in demand. Although you want your supply chain to run as efficiently as possible, you don’t necessarily want operations running back-to-back, as this could mean greater disruption if something goes wrong somewhere in the chain.

2.) Plan for contingencies

Having a detailed contingency plan in place allows you to adjust processes on the fly if something goes wrong. With that in mind, some strategies to consider are: 

1. Diversify your supplier network – Suppliers are susceptible to market forces just as much as you are. Maintain a diverse supplier network and use local suppliers to minimise the risk of disruption and avoid international issues.
2. Diversify your distribution network – With current staffing shortages, your distribution network is one area to pay particular attention to. Work together with your staff to account for this, and consider using temporary staff or coaxing back previous employees to help keep up with increased demand.
3. Create a financial safety net – Make sure that you leave enough room on your balance sheet to cater for fluctuating supply and manufacturing costs. 

3.) Identify workflow inefficiencies

Effective supply chain management includes regular rooting out of workflow inefficiencies that could end up being disruptive. Consider the end-to-end process and look for problem areas which may need to be addressed. This might involve increasing storage capacities, implementing better facility or container management, or fine-tuning transportation practices. 

4.) Streamline your ordering process 

Streamlining your ordering process can help to make sure your goods are delivered on time, every time. Set regular dates to place weekly or monthly orders with your suppliers, taking into account when stock is likely to be low. Better still, automate your ordering process – though this may not be appropriate for businesses with irregular or unpredictable supply requirements. 

When orders are placed on the same days every month, you’re less likely to forget an essential order and your suppliers will be able to regulate their stock to accommodate their demand. If possible, establish a contract with your supplier that covers all items included in your usual order. That way – national shortages and disruptions aside – your supplier will always have the items you need on hand. 

5.) Reduce product packaging

Cutting back on product packaging is good for the environment and can reduce supply chain costs, while protecting against disruption. If you don’t use as much packaging, your entire supply chain network is simplified and there’s less opportunity for things to go wrong. Plus, you’ll probably find it’s a hit with your customers! 

6.) Monitor customer demand to manage your inventory

Monitoring customer demand to make sure your inventory can keep up is one of the most simple and effective ways to prevent disruption. As demand for certain products increases, you’ll need to allow for this in your regular orders to make sure stock doesn’t run dry. 

In addition, take notice when demand for a product dies down. If you continue ordering at the same rate as you were previously, you may find your storage facilities are taken up with low-priority stock, leaving no room for the supplies you actually need. 

7. ) Make use of automation

Making use of automation is a great way to reduce supply chain costs and manage disruption, so it’s worth considering where and how you may be able to achieve this. Automation allows you to free up staff for planning, forecasting and other key activities which need a human touch.

8.) Outsource where necessary

Outsourcing supply chain management is an option for companies who wish to fine-tune processes and reduce supply chain costs, without burdening their own employees. Bringing in a professional supply chain manager gives you access to knowledge, skills, and facilities you may not otherwise have. This can give you a competitive edge, while making sure your supply chain processes are as cost-effective and agile as possible.

While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.