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Supply chain continuity is a critical aspect of running a successful business. But what is it, and why is it so important? In this post, we'll break down what supply chain continuity is and explain why it's essential for businesses to have a plan in place should disaster strike.
What Is Meant By Supply Chain Continuity?
In business, supply chain continuity is the uninterrupted flow of materials and components up and down the supply chain, from supplier to customer. A disruption in any link in the chain can jeopardize the entire operation. To minimize risks, companies often build contingency plans that provide alternate sources of supplies or finished products in case of a major disruption.
The goal of supply chain continuity efforts is to keep businesses running despite disruptions, whether they are caused by natural disasters, economic downturns, pandemics, or other unforeseen events. By preventing or mitigating disruptions, businesses can protect their reputations, bottom lines, and even their very existence.
A strong supply chain continuity plan requires a clear understanding of the potential risks
There are a number of things that can cause an interruption in the supply chain, such as:
- Transportation delays due to adverse weather conditions or accidents.
- The damage or loss of inventory, such as during a natural disaster or fire.
- Production issues with manufacturers and suppliers.
- Unforeseen breakdowns of important components in the supply chain.
eCommerce businesses need to work with trusted suppliers who use the most efficient modes of transportation, have contingency plans in case of a disruption, and provide accurate updates on where products are in the supply chain. Technology can be used to monitor supply chains for disruptions. eCommerce businesses also need to test their backup systems regularly to make sure they're working.
Supply Chain Continuity: What It Means for Your Business
The term "Continuity" is an allusion to the idea that a company must continue to operate, even when confronted with unplanned or unexpected challenges. To accomplish this, the company must implement strategies to continuously support key business processes.
A company's supply chain is one of its most important business processes, and an interruption in that process can have a devastating effect on its capabilities. Supply chain continuity management (SCM) addresses this risk by establishing processes for assessing, prioritizing, managing and mitigating disruptions to critical supply chains.
To maintain supply chain continuity, a business must have a strategy for preparing for and recovering from disaster or other interruptions, as well as the ability to implement that strategy quickly if needed. This requires a thorough analysis of all areas of risk - including disruption to raw materials supplies, transportation networks and communication systems - as well as the ability to quickly and effectively manage those risks.
An effective SCM program, like an effective business continuity plan, is based on the best information available at the time of development; it includes procedures that can be implemented as soon as a disruption occurs and will only become more refined as additional information becomes available.
1. Map Your Entire Supply Chain
You start by identifying all the players in the supply chain, from the first point of contact to the final delivery destination. This will involve a lot of research - following companies on LinkedIn and Twitter, for example, so you can find corrective measures if a supplier had a disruption in the past.
2. Identify Your Key Suppliers
It's important to know who your suppliers are and where they get their materials from. You can have a list of them on Excel, but it would be more efficient if you could do this collaboratively with other companies through an app that allows you to identify critical suppliers.
3. Draw Up a Contingency Plan for Your Key Suppliers
It's crucial to have a contingency plan for your key suppliers in case they fail or are unable to fulfill their contract with you. Write down who would be the replacement supplier, what materials would be provided and how it is going to affect your delivery schedule.
4. Find a Backup Supplier
It's also important to have a backup supplier ready in case you need them - even if it isn't going to be needed anytime soon. You could draw up a list of potential suppliers or use an app that allows you to store the relevant information as well as share it among your team members.
5. Understand Supply Chain Visibility
Know where your inventory is, what kind of stock levels you have, and how long it takes to distribute products or materials across the supply chain. Having this visibility will allow you to be more agile in case of an emergency.
6. Be Proactive And Prepare For Shocks
It's important to be proactive and not hesitate in finding solutions to problems before they arise. There are companies that provide assistance during an emergency, like the Red Cross, for example.
7. Move Inventory Across Channels
You should always have excess inventory or materials that can be distributed across your supply chain network quickly. Having this will allow you to respond to spikes in demand or supply shocks.
8. Keep Vulnerabilities In Mind
It's useful to write down all of your vulnerabilities and the help you are given during an emergency might be different depending on where it occurs, i.e., whether you are able to get assistance from other companies near you or not. For example, if a supplier of food and beverages suddenly fails, you may need to find a way to go around the city and provide meals for your customers until the situation gets better. Be prepared with alternative plans in case certain suppliers fail or are unable to fulfil their contract with you.
Related: 8 Supply Chain Metrics & KPIs You Need For A Successful Business
Example Of Supply Chain Continuity
Take the example of a company producing perishable food items and shipping them through trains.
As an eCommerce business owner, you know that it's important to maintain continuity in your supply chain. This means being prepared for any risk factors that may come up, such as bad weather or train accidents. One way to do this is by having a list of alternative cold storage warehouses to which you can send your products in the event of a problem with your designated cold storage warehouses.
One way to do this is by creating a list of alternative cold storage warehouses where you can send your products if something should happen to your designated cold storage warehouses (i.e. bad weather, train accidents, computer glitches...the list goes on and on).
So, how do you find a cold storage facility that meets your needs and is financially feasible? Here are some tips:
1. Determine how many square feet of freezer space you need to store products. If your business requires less than 5,000 square feet of freezer space, you can consider cold storage warehouses in your area. Once you determine the size of freezer space you need, it will be easier to find a location near your business to minimize shipping costs and maximize efficiency.
2. Find out if the cold storage warehouse is located on an active train line. If the rail line is active, the facility may be subject to train delays.
3. Find out if there is ample room for expansion at this site. If you plan on expanding your business shortly, it's best if the cold storage warehouse can handle your growth.
4. Ask yourself what type of business climate you prefer when it comes to working with others in the cold storage warehouse industry in your area. To give you an idea, here are three different types of business climates you may encounter when considering alternative cold storage.
Conclusion
A supply chain continuity plan is an essential part of running a successful business, and if you don't have one in place now's the time to start. It has been estimated that 90% of businesses aren’t prepared for natural disasters like hurricanes or tornadoes, but by partnering with a 3PL like Simpl we can help lighten your load and take some stress off so you can focus on what matters most - growing your company!
Recommended: 3pls And 4pls: How Can Supply Chain Management Minimize Cost?
