The Common Causes of Supply Chain Disruption and How To Fix Them

Are you worried about a potential supply chain disruption wreaking havoc on your business this year? With the holidays and a busy shipping season right around the corner, it’s a good time to start thinking about supply chain issues and how you can mitigate any possible problems. It’s always better to be prepared than to suffer the unintended consequences of a supply chain disruption. As a manager, you need to be prepared to assess, identify, and act on potential risks while ensuring your suppliers are able to meet your delivery needs.

Technology Issues

Technology is often the driving force for most businesses. Failing to adapt to changes in the technology that drives our industries can be monumentally bad. Since logistics can be a physical job, some companies may be technology resistant. This can cause disruptions in some cases. Another key player in disruptions is the lingering threat of a cyber attack. Ransomware, data theft, phishing, and other cyber attacks are big problems in logistics. Sometimes they are perpetrated by attackers from competing organizations or opportunists looking to extort a company. Other times, they may just be intended to be a disruption. Regardless, cybersecurity is an important consideration for reducing supply chain disruptions. Along with third party risk assessment, it should be incorporated into any risk management strategy.

Transportation Costs

Understanding how much transportation costs will impact your supply chain is key to preventing sourcing problems. Fuel, maintenance, parts, and labor all play a role in figuring out transportation costs. Are suppliers going to be sending your cargo via rail or trucks? What kind of fuel efficiency do the vehicles have? Are the following the concept of lean transportation? These are all questions your suppliers need to be able to answer if they’re going to be a viable source for the goods that you need. Failing to account for or respond to the fluctuations and transportation costs can end up costing your business a lot of money over time, which is not an ideal outcome for anyone.

Poor Planning

Any problems along the supply chain can easily be compounded by one thing: poor planning. You want to have a competitive advantage in your market. The best way to attain that is to use a platform that allows for constant supply chain planning. Creating value and covering multiple areas (like financials, transportation, procurement, sustainability, and more) is much simpler with a dynamic platform that lets you control the variables all in one place. Planning can improve efficiency through redundancy and continuous designing empowers you to meet customer needs and avoid significant supply chain disruption. Meticulous planning and elegant design help you plan for negative impacts and optimize recovery. When it comes to reducing disruptions and being proactive, digitizing your supply chain will help you overcome the obstacles and threats that might hold you back now and into the future.

Natural Disasters

Did you know that a natural disaster like an earthquake, fire, blizzard, or severe weather event can negatively affect your supply chain? One prominent example in everyone’s minds right now is the global COVID-19 pandemic, which threw a major wrench into the supply chain. But other disasters can be just as bad or much worse. Bad weather can cause delays and damage to areas through which goods travel. This can impact the roads or even the warehouse is where items are stored. If a warehouse is badly damaged during a natural disaster, it results in considerable monetary losses and often damage/loss of the goods themselves. Furthermore, roads can be damaged or blocked off which can result in fewer trucks moving through the area. At ports, a hurricane or tsunami might cause significant damage or restrictions. Railroads (another common way to transport goods) might be cut off or damaged as well. That’s why it’s prudent to create a disaster preparedness plan as part of your overall risk assessment strategy. Being ready to continue operations and find alternate supply sources in the event of a natural disaster is useful for responding to unpredictable events that can impact your supply chain.

Regulatory Changes

While natural disasters in poor planning are probably the most likely causes of supply chain disruptions, regulatory changes can also have an impact. Whether it’s taxes, fees, labor laws, or trade restrictions, regulatory changes can cause some headaches throughout sourcing and supply chain design. That’s why it’s so critical to address these potential regulations and changes in any part of the transport process. Knowing what you need to adhere to and overcome in order to do business is essential if you want to succeed. As the global market expands, there is always potential for a regulatory change. Understanding and expecting these changes – and how you react to them – should inform part of your strategy as you move forward.