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Smart Moves to Overcome the Supply Chain Crisis

by David Oeters on December 7, 2021
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Talk to enough business owners and manufacturers and the problem rapidly comes into focus: The global supply chain is struggling.

Business runs on goods, whether it’s manufacturing parts and materials, or paper and envelopes for billing, or uniforms for retailers, or products to be sold. Due to the challenges to the global supply chain, finding those goods can be very difficult right now. Whether it’s a computer chip for an automobile manufacturer, parts for new gaming consoles, chicken wings for a local hangout, coffee beans for a supermarket chain or paper for a book publisher, finding goods can be … frustrating.

Before the pandemic (can any of us easily remember those golden, halcyon days?), ordering parts and materials could be as simple as calling a vendor or sending in an order by email or fax. Today, an order is preceded by a, “Do you have it in stock?” and then (typically) a, “When do you think it will be in, and when do you think I can get it?”

Businesses today are faced with unprecedented supply chain challenges. It’s adding a layer of uncertainty and risk to what should be a time of excitement as businesses get back to work and consumers look for normal. Business leaders need to adjust their thinking, processes and strategies to compensate.

The Cause of Supply Chain Challenges

During difficult times, it’s human nature to search for and identify the root cause of our problems. We all want a bad guy, and it feels good to have someone or something to blame.

The struggle many of us face, however, is there isn’t an easy reason we can point to for the current supply chain crisis. Rather, it’s a swirl of individual problems creating a storm of challenges.

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For example, torrential rains in Colombia, the second largest producer of Arabica beans, bit deep into the global supply of coffee beans. Drastically increased (and unexpected) demand for semiconductor chips has tightened their global supply. Even as manufacturers rapidly try to expand factories and increase production, businesses struggle to meet consumer demand with a lower supply of chips.

Cotton, a base product in the garment industry, is struggling to keep up with demand. A cyclone of issues is at play, including lower crop yields due to weather, a fraud scandal in India and allegations of forced labor in China cotton harvests. Even the infrastructure that supports our global supply chains is under unprecedented pressure, with travel restrictions, port closures, shipping problems and a lack of workers.

Our global business community has enough resiliency to overcome one or two problems with minimal delays, but when these problems start adding up, we see the cascade effect that’s happening now.

How to Overcome Supply Chain Challenges for Your Business

Now is not the time to ignore the supply chain challenges. Companies across business verticals, including your competition, are adapting. Future success will be determined by the actions taken now. The right strategy will result in long-term, sustainable dividends for your business.

Let’s take a look at a few steps you can take to protect your business during these difficult times.

Expand Your Vendor Network

Many businesses have struggled to expand their vendor and supplier network. In the current environment, it’s more important than ever to diversify and find new suppliers. With multiple procurement channels for goods, you are more likely to find vendor partners who can meet critical needs. With fewer channels, a single late shipment or lost delivery can put you and your business at risk.

Leverage Distributors Rather than Manufacturers

Managing a supplier and vendor network can be difficult. As a business owner or procurement manager, you’re an expert in your business. Tapping into market information, acting as an advocate to suppliers and reacting to the global market is distributor expertise. In the current market conditions, a well-connected and experienced distributor can be a competitive advantage. They have the information and market data to see supply chain problems before they happen, and breadth and depth of supplier relationships to implement solutions when necessary.

Open Communication with Suppliers and Vendors

The days of sending in an order with a “needs-by” date and demanding quick results are over. For better results, talk to your distributor or supplier about your needs and requirements and work with them to come up with a solution. Work collaboratively, and explore alternative solutions when necessary. Not only will this allow them to use their expertise for your benefit, it could potentially set you up for future success as you explore all your options and open up additional communication channels.

Leverage and Utilize Data

For years, many companies have complained about ineffective business data strategies. In the light of current market and supply chain conditions, there has never been a better time to build an effective data strategy. With accurate usage data, you can see and correct waste and better utilize on-hand resources. If costs increase, you can better predict your ROI to know if a rush shipment will really pay off, or if you’re throwing money away. With accurate data, you can make informed supply chain decisions.

Forecast and Plan Ahead

All too often, business leaders rely on precedent when making decisions. Buyers estimate orders by what feels good, rather than understanding needs and requirements. In the past, that might be all you needed, but it can mean waste and unnecessary orders. That leads to serious, problematic and ultimately unnecessary costs in the current supply chain crisis. Start forecasting, planning ahead and using the data that you’ve collected. Look at upcoming sales projections, ask your distributor or vendor what the current delivery or back order time is, and start the order process early. Forecasting will keep you a step ahead of supply chain disaster.

Navigating the Supply Chain Crisis

With so many issues impacting the supply chain, and with no end in sight for many of them, it’s time to start making supply chain support a priority. Inclement and potentially disastrous weather, workforce issues, global instability and the ongoing pandemic aren’t going away. It’s time for business leaders to start taking action if they haven’t already. If they have, it’s time to expand those actions.

Every step you take to support your business can pay quick and beneficial dividends in the future.

If you have questions, or want to look at your options for diversifying your suppliers, working with distributors, or utilizing and leveraging your data, then contact GO2 Partners. With our supply chain expertise and as a leading distributor in numerous markets, we have the experience and resources that can make a difference for your business.

Topics: Ecommerce, Supply Chain, ecommerce distribution