Protecting Your Business from Supply Chain Shortages
Over the past few years, the supply chain has experienced major kinks due to a number of factors: abnormal buyer behavior, source material scarcity, government shutdowns, and worker shortages, to name a few.
What can a business owner do to protect their business from shortages and revenue loss? Let’s take a look at a few ideas.
Source New Suppliers
Being dependent on only one supplier for a key item is risky. Increase your options by finding new suppliers to use as backups or alternates whenever you can. While it’s admirable to buy local, it’s not always possible. Expanding your network will provide you with more flexibility, even if you have to pay a bit extra at times.
Understand Your Timeline
How accurate are your lead time predictions? Are you providing enough time from ordering and delivery before you need the part in house? Timelines have changed a lot in the last year. Spend some time reviewing and recalculating lead time if needed.
Get good at forecasting so you can anticipate and prevent inventory shortages before they occur. We can help you set up the correct spreadsheets and generate the right reports so you’ll have better information for decision-making in this area of your business.
The more dependent your business is on a particular supplier, the more you want to develop that relationship. Adding a personal touch might not help you get your orders faster, but when troubleshooting is needed, you’ll want the extra help a personal relationship can provide.
Increase Communication and Collaboration
Increase communication with your suppliers so they can manage their own timelines and supply chains better. Provide them with accurate forecasts and let them know how they can better meet your needs in the present and in the future.
Audit Inventory Records Frequently
If your inventory balances are only adjusted once a year, inaccurate inventory numbers are likely to cause problems. Find ways to take inventory more often, or at least increase the accuracy of inventory balances. The savings will be worth it; you’ll have fewer surprise out-of-stock or back-order situations that can cost not only sales, but also customer loyalty.
Proactively Manage Shipping
There may be times when paying rush charges on shipping is justified simply to get the parts in house. Actively managing shipping and in-transit items will help you keep a handle on this. When possible, line up alternate shipping methods in case one method becomes unreliable. This is especially advised with overseas shipments where more can go wrong.
Create a Supply Chain Task Force
If supply chain issues are critical in your business and have been costing you profits, it might be time to create a dedicated team to manage and prevent crises. Consider organizing a group of employees that can be responsible for strengthening your supply chain. Try these ideas to smooth out supply chain woes in your business and let us know what results you see. In the meantime, if you need help managing your business finances, reach out and we’d love to help!