How to Mitigate Threats to Your Global Supply Chain

business man writing supply chain management conceptBusinesses of all sizes utilize global supply chains, and while they can increase efficiency and lower costs, they also bring a measure of increased risk. From natural disasters to pirates — both virtual and real — the threats of disruption can cause massive headaches, and in some instances, they can cost you a lot of money.

When you set out to become an entrepreneur or CEO knowledge about markets, financial metrics, sales, advertizing, profit margins, leveraging debt and providing good leadership can fill your thoughts day and night for a lifetime. Because of the already full-to-bursting nature of running a business, many people overlook the importance of a well-oiled supply chain. While there’s no way to plan for every contingency, there are ways to reduce your vulnerability. Here are a handful of tips to help you mitigate the dangers lurking within and around your global supply chain.

Consider the Whole, Not Just the Parts

While it can be tempting to assess risk along the individual parts of a supply chain (i.e. procurement, distribution, manufacturing, transport, logistics, etc.), a supply chain’s strength lies in its whole. Even if your manufacturer is the most efficient in your industry, if what you’re manufacturing cannot be transported in a reliable fashion — and in a timely manner — you’re better off with a less efficient manufacturer who can get your goods to market. When you remember the whole and not just the fundamentals of your supply chain, you can more wisely assess whether or not the supply chain network is healthy and safe. Too much attention to details can keep you from seeing the big picture in your business.

Go Local if You Can

When businesses realized decades ago that they could profit mightily from cheap overseas labor, the United States’ economy relocated jobs in droves, while corporate productivity and efficiency went through the roof. As globalization marches on, cheap overseas labor is getting less cheap, and while it may be the move of an early adopter, going local with any aspects of your supply chain has some advantages. For starters:

  • Weather in other countries will have impact on your business.
  • Partnering with a local business — even in another state — makes for good marketing.
  • Traveling to inspect aspects of supply chain integrity will be easier, safer and cheaper.

Have Adaptability and Agility

white truck on the asphalt roadWhile it can be ensure it happens, fostering a culture of adaptability and agility within your supply chain is essential. Market conditions, political conditions and weather conditions can all change in an afternoon. Work for transparency — not just within your business but in the businesses of those you rely on within your supply network, and seek to understand the organizational structures and cultural subtexts of those you’re working with. That way, when plans go sideways, you’ll be able to fix them more efficiently.

Diversify Your Supply

When it comes to business, no one ever seems to talk about Plan A because Plan B has to be instituted so frequently. If you don’t have backup protocol, plans and suppliers for every aspect of your supply chain, make it a priority to develop them. Then, test it. That way, if Plan A ever fails, you won’t wish you’d developed a Plan C.

Cultivate “Dynamic Operations”

For the most part, supply chains are developed during times of stability. Unfortunately, it’s likely that stability will at some point and in some aspect give way to instability. To prepare for the necessary restructuring of a supply chain in volatile times, elements of “dynamic operations” can be helpful. Answer these questions:

  • Are your supply chain operators equipped to synthesize internal and external information to lessen disruption?
  •  Are the people in charge of the various points along your supply chain navigating the distance between being efficient and being effective by diversifying supplies and suppliers?
  • Are there protocols in place for access to emergency fuel, medical supplies, backup energy and the like?

If you rely on a supply chain that exists beyond your city’s limits, lessening the damage done to your business in the event of a supply chain meltdown is essential. From backup plans to bringing it back home, mitigating the threats to your supply chain takes a little planning and willingness to do what is necessary to make sure the job gets done.

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