Disaster Preparedness Economy Operations Strategy

How an integrated plan can help relieve supply chain pains

Even as the world begins to emerge from the Covid19 pandemic, its effects are still being felt throughout the supply chain that are resulting in delayed orders, rising prices, and customer frustration.

Overall, 44% of small and midsize business decision makers believe supply chain issues could dampen holiday sales, a recent survey of small businesses by Verizon shows. Those working in retail are most worried about economic issues, while supply chain issues dominate concerns among restaurant and bar owners.

Yet a global pandemic is not the only issue that could disrupt your supply chain. Even in normal times, companies must proactively plan for factors that could throw off their normal operations – and have a strategy for dealing with them.

Here’s where to start:

Prioritize forecasting. Keep an eye on current trends and patterns so that you can identify issues at their earliest stages and act accordingly. Consider using an  automated logistics tool that gives you a big-picture view of things like general pricing and shipping trends.

Consider when to buy more than you need – if you can. If it’s in the budget and you’ve got room to store it, overbuy high-demand inventory.

Diversify your inventory and your vendor base. The less dependent you are on one single product or single supplier or vendor, the better you’ll be able to pivot if it becomes unavailable. Depending on your industry, you may want to diversify manufacturers too.

Have a disaster plan: In case of a hurricane or other natural disaster, you should have a contingency plan to move your operation quickly to a location outside the affected area. If you buy from suppliers, try to have several sources located in different areas, so that a single disaster can’t interrupt your flow of raw materials or parts. Most importantly, make sure any contract you engage in has a “force majeure” clause.

How to optimize your supply chain

In a webinar called “Optimizing Your Supply Chain” for Florida SBDC at FIU,  Ricardo Newark, a consultant for the small business development center at FIU’s College of Business, discussed a strategy for optimizing your supply chain. In fact, he said, a properly managed supply chain can become a valuable competitive advantage.

It all starts with deeply understanding your supply chain – both the product flow and the information flow. Overall, you want to maximize the product availability and minimize the transportation cost, while also minimizing inventory carrying cost.

“The key objective is to optimize each one individually while finding the best balance among the three to support the company’s performance,” Newark said. “A small component can shut down the whole operation. Once you lose customers, getting a new one is very difficult.”

The key to properly manage the supply chain is to have the proper information, Newark said. With proper data mining you become smarter about your customer and on managing supply chain.

You need data to understand the supply-demand process, to forecast your demand,  understand your lead time, when you have to place the order, etc, so there is no surprise. You need to make sure you supplier and distribution work in sync. Information flow is critical — otherwise you don’t have the tools to manage this.

“Circumstances change frequently and you need to respond appropriately, quickly and smartly.”

Be creative, flexible and open to change,” Newark said. “You cannot influence macro-economics but you can maximize your levers of control.”

Newark said preventive or protective actions could include:

  • Forecasting demand.
  • Diversifying your supplier base.
  • Making sure your product has shipping flexibility – planes, trains or ships.
  • Considering domestic vendors because sometimes the extra cost of international vendors is offset by other costs.
  • Keeping a higher inventory level – very selectively. For your products that move – and you have a certainty of that – have a higher availability of those.
  • And finally, by watching your margins. That’s always good advice.

Hear more on this important topic on this webinar:


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