In recent times, if you have noticed a sudden depletion of products in shops and a substantial delay in the delivery of products to stores, you are not the only one. Supply chain disruptions have been hitting us from all sides lately. Let’s analyze what has caused this situation and how businesses can overcome this in the best way possible. In this edition of the newsletter, we will be looking into the various disruptions in the supply chain and strategies to mitigate them.
What is causing the disruption?
The reason for the supply chain disruption cannot be limited to one. Here are a few key factors.
Global events.
Natural disasters and political unrest are two of the major aspects that have impacted the global flow of goods.
Labour shortages.
In critical areas like transportation and manufacturing, a reduction in the number of workers created delays and product shortages.
Transportation issues.
Port congestion and shortage of shipping containers have slowed down the global movement of goods.
Demand fluctuations.
A sudden change in consumer demand can significantly affect the supply chain. For example, when a gadget or fashion trend acquires popularity, the manufacturers might not be prepared to meet the demand. This can disrupt the supply chain.
Strategies for mitigation.
To keep things running even during crises, businesses adapt feasible strategies.
Diversifying suppliers.
When a company relies on multiple suppliers from different regions, it saves them the trouble of confiding in a single source. In times of shortages or high demand, companies can procure from multiple suppliers.
Increasing inventory.
To buffer against supply chain hiccups, holding higher inventory is a practical strategy. However, the money that can be set aside must be considered before relying on this strategy, as this is a balancing act between cost and preparedness.
Investing in technology.
Every field is utilising the possibilities of AI. One of the best advantages of AI and automation systems is its application in the logistics field. AI can be used to predict risks and suggest alternative actions.
Enhancing communication.
Supplier relations and good communication channels assist in the detection of problem areas and timely responses.
Flexible logistics.
Diversifying transport means such as air, land, and ocean, and planning different routes are useful in ensuring the flow of goods in times of disruptions.
While supply chain disruptions are challenging, they are not impossible to overcome. With proper research and understanding of the root causes, it can be tackled, while businesses can ensure smooth operations and mitigate risks.
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Best regards,
Team DGL