Over the summer, many companies and manufacturers faced possible strikes by the workforce, threatening another supply chain nightmare similar to that caused by the COVID-19 pandemic.
Fortunately, talk of strikes died down and normal operations have resumed for most businesses. However, many companies were still concerned and wondering how to lessen the impact of supply chain issues in the future. The key to mitigating, if not avoiding, potential supply chain threats is to view supply chain management as part of your organization’s overall risk management plan.
First and foremost, it is important to understand how supply chains can be negatively impacted. Strikes, for example, would lead to a lack of inventory as the production and shipment of products would be delayed. Another common cause is financial instability, as some companies do not have the working capital to maintain adequate inventories, resulting in commodity shortages. In addition, many companies today face employee turnover, which not only leads to scheduling problems, but also to more time hiring and training replacement workers.
Whether your company is in a chaotic manufacturing and supply chain ordeal or worried about a future debacle, now is the time to create a strong risk management plan that will both help prevent supply chain bottlenecks as well as to de-escalate their effects.
The first action a company should take is an internal supply chain assessment. Identify bottlenecks as well as other problems or potential problem areas. Assess whether you have enough suppliers and whether you need to diversify your geographic locations in the event of a natural, political, or economic disaster. Take a look at stock levels and consider which raw materials are crucial for production. One of the best ways companies can assess their supply chain is by creating a strong supplier development program with a rating system. This assessment must ask questions: Are the suppliers on time? Are they cost competitive? Are they investing in new technology and equipment? After completing this assessment, your organization should have the information you need to fix, customize, and fill in the gaps.
Additionally, there are other key business strategies that should be considered to mitigate supply chain risk. This may include creating additional capacity through the purchase of equipment or the acquisition of a key supplier or competitor. Also, don’t forget to communicate consistently with suppliers and customers on supply chain issues and focus on improving the forecast data used for planning.
Not surprisingly, cybersecurity is a huge area that is overlooked; Any IT and cybersecurity downtime is one step closer to a security fiasco as your IT operations connect you to your customers, suppliers, manufacturers and your internal team. Other areas such as day-to-day financial operations and human resource management also tend to get bogged down, leaving many organizations feeling overwhelmed.
Relying on a company like Rehmann to provide outsourcing and risk management resources saves your organization time, money and stress when problems arise in the supply chain. Hire a 24/7 IT MSP to manage your security and protect your business from external cyber threats. Bring in a fractional CFO to support ERP system improvements and inventory analysis. Supplement your HR department with employment improvement projects that determine if your company is creating the best work environment for your team.
Supply chain issues are coming, but with the right tools and the right team behind you, your business can be prepared. Assess the problem areas, invest in the right expertise, act immediately if possible, and create the ideal risk management plan that will bring peace of mind to your business.