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Supply Chain Disruptions: Conducting Business as Usual – PART 2

supply chain disruptions
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CLICK HERE FOR PART 1

If we’ve learned anything from the events of the past months, it’s that everything can change at the drop of a hat. Those that are able to quickly gauge the new surroundings and adapt are the ones that eventually come out on top. 

Are you prepared if you were to suddenly lose your supplier? 

During the early months of the 2020 COVID-19 pandemic, this was common. In early March, it was difficult to find a factory open in China. Suppliers located in the Hubei province were closed even longer. 

From time to time, these things happen unexpectedly – for whatever reason. Why not be prepared with alternative options? 

Back-up/Multiple Suppliers

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A good supplier you can trust and that meets your business needs takes time and effort to secure. Usually, most don’t want to spend the time or effort to source a second. However, it doesn’t hurt to shop around from time to time. 

Other suppliers might even offer better deals for the quantities of goods you need. You wouldn’t be aware of this if you didn’t shop around. 

There are many scenarios of sellers who source from multiple suppliers. For some, one facility alone cannot produce the volume of their orders. For others, it is a business savvy move for having a contingency plan in place. 

Find a second supplier and order samples if they’re offering a favorable deal. If the sample is up to your standards, order a small batch and inspect the quality. In a time of need, you could rely on this other supplier. You can also leverage the other supplier’s prices to negotiate prices with your current supplier. Or, you can simply have another facility in place to take over the production of your inventory in case your current supplier becomes unavailable.

You can’t know about better deals or opportunities if you don’t shop around. 

There are many scenarios of sellers who source from multiple suppliers. For some, one facility alone cannot produce the volume of their orders. For others, it is a business savvy move for having a contingency plan in place.

Sourcing from different countries 

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Low labor costs, massive production capabilities and large number of ports make China an obvious candidate for sourcing products. 

But along came COVID-19. The pandemic isn’t the only factor that has caused challenges in sourcing goods from China in recent past. The trade war with the US has caused additional obstacles and made it even less reliable. 

Many sellers and companies were adversely affected when a first round of tariffs were implemented. Several were forced to move manufacturing to another country to stay in business. While many small, private-label sellers were unaffected, it still isn’t an ideal scenario. 

However, the trade war between China and the US is ongoing. If you are sourcing from China, it’s good to have backup options if needed. 

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Finding alternative fulfillment options

If you are not fulfilling your orders, you rely on your fulfillment service to operate optimally. 

During the peak of the COVID-19 pandemic, Amazon made an abrupt decision to prevent any seller from adding new inventory of items that fell outside of what were considered essential categories.

No prior notice was given. Many sellers were unable to create new shipping plans and ran out of stock, while others scrambled to find alternative means for business continuity. 

While Amazon is not the only fulfillment service out there, competitor services were not accepting new clients due to the overwhelming demand for their services. 

If a seller was able to find a service with comparable prices, making the switch was not easy. Many required a signing fee per every SKU to be stored in their facilities. With no other reasonable temporary alternative solutions, many sellers went out of stock. 

Approach your fulfillment methods the same way you would shopping around for a second supplier. 

If you find a service that might offer better conditions than the one you are using, consider siphoning off some of your inventory and your orders to see how well it works for you. 

If it turns out that it’s a better system than the one you are currently using, you can easily commit more and more inventory to that service over time. At the very least, you will have an alternative shipping method in case of emergencies.

Quality control

While not necessarily a disruption to your supply chain, quality issues can put your entire operation in jeopardy. 

If you’ve ever had a significant number of damaged, or otherwise defective units delivered in a batch of products, you understand how vital it is to resolve the issue as quickly as possible. 

This involves including an additional link in your supply chain used to strengthen its integrity. 

There are plenty of well established companies that specialize in doing exactly this.

Yes, this takes time and costs money; however it could eliminate a lot of cost and time in the long run to ensure your goods are in tip-top condition.

In conclusion, 90% of effectively navigating supply chain disruptions involves having a solid contingency plan. In conclusion, 90% of effectively navigating supply chain disruptions involves having a solid contingency plan. 

          • Evaluate every aspect of your supply chain operation from time to time. 
          • Consider areas of efficiency and cost-effectiveness. 
          • If an area of your operation were to fail, what is your plan and options for quickly getting               back on track?

Every aspect of your supply chain is replaceable:

          • your supplier
          • fulfillment network
          • manufacturing country

Successful entrepreneurs create options in crises and always look for ways of improving. No mechanism of your business is set in stone. Occasional audits and research of your business operations options can create valuable opportunities and prepare the company in worst case scenarios. 

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