Navigating through supply chain disruptions in uncertain times

Supply chain disruptions are hard to navigate. Organizations that fail to develop contingency plans to ensure continuity across all aspects of the supply chain from end to end can find themselves in major peril.  In today’s fast-paced global economy, it is increasingly important to design supply chains to absorb the shocks of black swan events and anticipate risks that could have major impacts on business results.

As per industry reports, only 35% of companies have a formal overarching risk appetite statement, and even less than 11% believe in customizing risk appetite in business units. Organizations should be prepared to face supply chain disruptions, delays, and rising prices through 2023. In fact, container and air freight shipping rates may become three to four times more expensive than in 2021.

The global supply chain is highly interdependent, so backlogs in one part of the world can set off ripple effects across the globe. In addition to coronavirus restrictions, geopolitical disturbances are causing significant container supply shortages, reduced port productivity and congestion at various supply chain nodes such as ports, airports, rail terminals and distribution centers. The combination of container shortages, supply chain delays and the high demand for imported goods means an increase in shipping prices.

While transporting goods via air rather than ocean may seem like a viable alternative, airlines reduced their commercial flights during the pandemic, which makes finding belly capacity increasingly difficult. Not to mention that switching to air cargo is around eight times more expensive than the ocean.

Whether dealing with a specific supplier issue, a regional crisis, or a global pandemic, when disruptions occur, many organizations struggle to execute their continuity plans.

Let us now have a look at a few ways to deal with supply chain disruptions.

Build a strong supply chain foundation

Post-pandemic, many companies have grown through acquisition, or they have allowed business units to manage their own internal systems. As a result, the same supplier is associated with multiple vendor numbers throughout siloed systems across the organization. Even during normal operations, this makes good decision-making difficult. It is always a challenge to aggregate supplier information from multiple independent systems, but during a crisis, the risks and liability caused by siloed data become more pronounced.

To transition from prioritizing operational excellence to commercial innovation for growth, companies must rebalance investments and develop capabilities to sense the voice of the customer. Use the resulting insights to innovate supply-chain-specific commercial offerings that can be delivered efficiently for optimum profit. Up-to-date, quality data is essential for an effective response during a quickly evolving crisis.

Efficient communication method 

Create a holistic communication channel instead of relying on just one mode of communication. It is often seen during crises that reaching out to the right person with the right information and at the correct time makes a lot of difference. Especially, in the case of data, once the data is received, it must be aggregated quickly to support the data analysis necessary to make critical decisions. Unstructured data derived from email and spreadsheets exacerbate the stress of a crisis, resulting in lost time and potentially bad decisions.

Focus on visibility and orchestration 

International shipping is fragmented and complex, and this calls for the need for real-time visibility and transparency for organizations claiming environmental and social impact. Companies should focus on eliminating supply chain blind spots throughout the world. Irrespective of the mode, customers should know the exact location of their shipments in transit while getting the most accurate lead times and ETAs (Estimated Time of Arrival) in the industry. Adapt sustainability metrics and accounting methods as you meet goals and as innovative approaches emerge.

Embracing digital supply chain solutions  

Organizations should look at accelerating investments in supply chain technology to enable real-time analytics and execution. It is predicted that 43% of enterprises will continue to digitize and integrate innovative technology into enterprise-wide systems. Alternative Intelligence, Machine Learning, Internet of Things, are the future of supply chain digitization and continuous adaptation of technology is key. Digital solutions create much-needed flexibility to react to changing conditions in real time and avoid further shipping disruptions. Digital supply chains also encourage sustainability by providing supply chain managers with centralized data.

The pandemic has shown us the need for an agile and resilient supply chain network, aligning business goals with supply chain strategy and driving continuous discussion at the executive level. This year will be challenging for the supply chain industry, but stakeholders can navigate this congested logistics world if they work together with a process-driven plan.