3 Ways to Help Mitigate Today’s Supply Chain Disruptions
12/16/2021 Lisa Stenglein, Stuart Gonzales, Cam Smith, Justin Colley
Supply chains across the globe and in virtually every industry have experienced significant disruption. Labor shortages, pandemic-related capacity reductions, increasing market demands, and weather-related factors are presenting challenges for organizations of all shapes and sizes.
According to some experts, these market conditions may persist for quite some time. Yes, these are unprecedented times.
The New York Times recently published an article titled “The World Is Still Short of Everything. Get Used to It.” And while that headline may be accurate, businesses can play a more engaged role in helping mitigate supply chain risk.
3 ways to help mitigate supply chain risk
1. Talk to your suppliers
Supply chains have slowed down — everywhere. Over the last few years, a good deal of capacity was removed to keep supply and demand in better balance. Now, as the economy returns, we're seeing a lot of capacity constraints with outside suppliers.
Tightness across industries, particularly for raw materials and freight, has been exacerbated by labor shortages brought about by the pandemic. This complicated recipe has turned normal lead times into anything but.
As timelines stretch, are you keeping in touch with your suppliers — and vice versa?
Open and transparent communication should not be the exception in your business relationships. Awareness of the headwinds affecting your supply chain will provide you with a better understanding of their effect on cycle times, potential cost increases, and any other variables you may not have given much consideration to in the past.
A port closure in China. A carrier embargoes pick-ups in the South. A COVID outbreak forces a factory into lockdown. These events will have ripple effects that may reach your business. If and when upstream issues enter the picture, ask to be told about them immediately so that you can be part of the solution to minimize any negative impact.
2. Plan well in advance
Supply chains everywhere have relied heavily on just-in-time systems. Right now, the world is discovering that there is a good deal of vulnerability to this way of doing business.
As lead times from suppliers continue to lengthen from days to weeks — and in some cases weeks to months — accurate forecasting and advanced planning will be critical. This extra effort up front will enable your supplier-partner to secure materials, identify high-quality alternatives, and better navigate any potential bumps coming down the pike.
And for those of you with an inventory system, now is the time to look at your replenishment triggers and determine if any adjustments should be made for earlier reordering. For example, if you built your replenishment to reorder in four weeks, now you may need to double it.
3. Weigh your options
Not all that long ago, having a high-level understanding of one’s supply chain was more than enough for a business to feel in-sync with their supplier(s). Today, we’re seeing a number of organizations dive deeper into their supply chains to gain a better understanding of availability. This has helped them become more open and agile in terms of weighing their options.
Given the current market, the likelihood of something becoming unavailable (e.g., raw material, parts, mode of transit, etc.) is high. Be ready to explore Plan B, C, or even D — the onus should be on your supplier to present you with multiple options rather than simply tell you something can’t be done.
In being receptive to a slightly different approach, you’re likely to discover an alternative that meets your unique needs and allows you to get the job done in today's constrained markets.
Make sense of the ripples
If you’ve made it this far, there’s a chance your organization is experiencing multiple disruptions to its supply chain. Labor availability, raw material shortages, and transportation capacity continue to present several challenges related to order fulfillment.
In most cases, these extenuating circumstances will result in extended lead times for production, delays in shipping times, and price increases. There are a few things you and your supplier should be doing together to combat these obstacles. To recap:
- Communicate regularly. Information about material availability and pricing often changes daily. A provider committed to your success will work to offer creative solutions and look for additional options as necessary.
- Know that advance notice is a powerful tool. Early order placement and acceptance of longer lead-times can help ensure availability. It’s helpful for your provider to understand as much as possible about upcoming orders, even if the information seems irrelevant.
- Be flexible. Keep an open mind and know you may often find substitutions that are highly comparable, within your budget, and fall in line with brand standards.
By making these important revisions to your upstream approach, you’ll gain a greater awareness of the ripples affecting your supply chain as well as some much needed flexibility to effectively navigate them.
The RRD supply chain experts who contributed to this post are Lisa Stenglein, SVP and Chief Procurement Officer; Stuart Gonzales, VP Global Strategic Services – Procurement; Cam Smith, VP, Procurement – Outsourcing and Supply Chain Services; and Justin Colley, Director of Supply Chain Services – Procurement.