Over the past few years, there have been constant disruptions in the supply chain, including COVID-19, Suez Canal blocks, and shortages of semiconductors. It’s time for a change in our approach to this “new normal” of supply chain instability as the stakes increase from brief revenue dips to more serious product shortages.
The issue necessitates significant modifications to supply chain tactics, including the following:
Consider population density in sourcing
Where are my clients located is the first thing you should consider when updating your supply chain strategy.
Given the costs and lost earnings if the supply chain breaks down so far from the consumer base, for example, if 90% of a company’s client base is in North America, maintaining 100% of sourcing in Asia is just unsustainable. The epidemic, the trade dispute between the United States and China, and the conflict in Ukraine are just a few current instances of supply chain problems that have impeded the export of commodities.
The next inevitable supply chain crisis will require managers who have historically relied on global sourcing techniques to create regional alternatives in order to survive and keep providing their consumers with services. Companies should take into account more capacity in their regional sourcing the more crucial the product being offered.
Diversify and derisk: Never rely on single product sources
It’s crucial to vary your product sources in addition to choosing your sourcing locations depending on the locations of your consumer bases. Using single sourcing exclusively as a supply chain approach exposes a business to the full repercussions of a variety of potential catastrophes, such as extreme weather, political unrest, and the escalating effects of global health issues. Having diverse sources for your products reduces risk significantly and lessens the effects of localised supply chain interruptions.
For instance, Apple’s supply chain is made up of a wide array of external vendors. The business diversifies and future-proofs its pipeline by sourcing components from vendors in 43 nations across six continents, sending the components to factories for assembly, and finally shipping the finished iPhones to warehouses and retailers throughout the world.
On the other hand, four major suppliers account for 90% of domestic output in the baby formula business. And the repercussions are severe if one of those suppliers is forced to shut down a facility. Baby formula cannot be produced at alternative facilities in the United States, leading to expensive emergency supplies from other nations and significant inequities that put the most vulnerable people in danger.
Make the last mile the best mile
Once things are purchased and stored in a warehouse, the difficulties continue. The last mile of delivery in today’s supply chain is likely more important than any other phase. One of the best places to make improvements to make up for delays that might have happened earlier in the supply chain is the last mile, from a warehouse shelf to a delivery vehicle and then onto your doorstep.
Last-mile delivery will advance as more businesses succumb to the demands of rapid e-commerce growth and rising consumer expectations. Consumers of today demand same-day delivery as well as other choices like curbside collection and buy online, pick up in store. In order to deliver essential goods to customers in a timely manner, supply chains must be both flexible and quick enough to accommodate a variety of last-mile delivery choices.
In the last mile, end-to-end vision is essential yet impossible to do manually. Robotic automation and artificial intelligence are helping businesses like FedEx, Target, and Walmart alter their warehouses in order to gain better visibility, enhance employee working conditions, and reduce lost time during the packaging and shipping process.
Businesses are frequently on the front lines in today’s chaotic environment, and they have a significant impact on how catastrophic situations are handled and if the effects on customers can be mitigated. Businesses today must take into account how their supply chain structure affects both their bottom line and the clients they serve, particularly when it comes to basics. It’s up to us to make the necessary adjustments to our supply chain strategy, to do our part, and to leverage the business’ considerable influence for good.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: Supply Chain Brain