Site icon Wonderful Engineering

4 Common Supply Chain Disruptors And How To Avoid Them

Peloton Wants Truck Drivers To Drive Two Trucks At The Same Time

Downtime is one of the biggest barriers to growth for a company. Unfortunately, these companies depend on a lot of moving parts to work as intended to be able to make money. Often, when one of these parts stops moving, everything else does too. 

Whether it is a truck driver waiting for their International trucks parts or a major corporation in need of raw materials for their product manufacturing, the supply chain needs to be up and running. 

It takes some supply chain risk management to successfully navigate these types of hazards. A big part of the management is to understand what the possible disruptions are so they can be mitigated. In this article, we will go over several common scenarios and how to deal with them. 

1 – Cyber attacks

Cyber attacks are not the most common type of disruption to the supply chain, but it is occurring more frequently than ever. As technology quickly expands, it becomes easier for bad actors to exploit weaknesses in the system. Attacking supply chains is a good way for them to do massive amounts of destruction and loss of revenue.

Massive amounts of data are transferred every day through the software required to keep the chain intact. Cybersecurity of the supply chain is becoming more of a concern and is something that every company should be aware of. 

The best way to avoid this from happening to your company is to be very disciplined with your own cybersecurity system. This won’t protect you against disruptions on other parts of the supply chain but can mitigate the fallout. A hacker gaining access to the inner workings of your company can cause massive disruptions and end up affecting other parts of the blockchain. 

To further mitigate that the company stays safe and the supply chain faces fewer disruptions, use shippers and manufacturers that use the blockchain. Blockchain is quickly becoming the most popular way to use the Internet of Things. It is very secure and can’t be hacked the way a single server can. In essence, the blockchain is hosted on thousands of computers so a hacker doesn’t have a single point of entry. 

By using blockchain for the company’s needs and staying on it across the entire lifecycle of the supply chain, it can minimize disruptions. 

2 – Natural disasters

Though there is usually plenty of warning, floods, hurricanes, and tornados wreak havoc on the supply chain. Even when it is known that they are coming, the magnitude is often overwhelming. The worst is that not only do these storms and other natural disasters do a lot of damage, but there are also long-term disruptions caused to the supply chain. 

The reason is that many businesses close permanently after when the cost to rebuild is too great. Some of these businesses are crucial to the supply chain and replacing them takes time and costs a lot of money.

The key to mitigating the damage from a natural disaster that happens a world away is to have a diverse system. Relying primarily on one big supplier for all of your needs is a problem. It only takes a small disruption to that supplier to wreak havoc on your business. Downtime is costly and very difficult to come back from. 

Having a backup supplier that is in a different region is a good idea. An even better idea is to have two primary suppliers that come in at different times so it removes the need to pivot after a primary supplier is unavailable. 

3 – Price increases

Many companies are operating on razor-thin profit margins these days. This relies on stable prices to continue. Fluctuations are expected on occasion and some are predicted well in advance. In these cases, the increase can be absorbed. 

There are times when prices become unpredictable. In the case of a natural disaster or geopolitical crisis, they pop up and can be difficult to maneuver around. It pays to be prepared for the unpredictable. If possible, stockpile products or materials when the prices are low and keep them as a reserve. In the case of market upheaval, there should be enough to weather the storm until the prices stabilize again.

Research and analysis are important to master to be able to spot trends from afar. There are usually signals before a price increase that can be deduced. Learning to spot these signals is imperative. 

4 – Geopolitical instability

Many companies use materials from areas with very low costs. These countries have cheap labor and lax environmental regulations to keep costs low. Unfortunately, these countries usually have very fragile governments. There are coups, wars, and rampant corruption that can prove to be very disruptful. 

There will inevitably be a lack of communication with the manufacturers and their shippers. There may also be unrest that creates travel hazards leading to massive delays. 

The best way to avoid these disruptions is to do research into the area where the manufacturer is. If need be, look into areas that have more political stability and are less likely to have civil unrest. As is the case with natural disasters, having a secondary supplier is a good way to get around these problems. 

If a politically unstable area is the only option then try to have a contingency plan for the worst-case scenario. In this case, there needs to be a plan that is ready to go when it seems that things are heating up. Usually, there are signs that something is about to happen which gives some time to react. 

Conclusion

These are the most common disruptions that many companies will face. There are others that will inevitably happen that every company will deal with that others may be spared from. It’s the responsibility of every company to make sure that these occurrences are not overly traumatic and can be overcome quickly. 

With these disruptions in mind, it should be easy to spot many others that may come up.