The Council of Supply Chain Management Professionals' defines Supply Chain as, 'Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities'.
Since supply-chain disruptions have a direct impact on business, they not only cause additional operational costs to company but also lead to customer annoyance.
There can be so many different reasons for supply chain disruptions including shortage of funds; natural disasters or unfavorable weather conditions; systemic vulnerabilities such as break down, accident or fuel dependence; and information fragmentation viz cyber crime, vandalism & political unrest. Sometimes a human error or carelessness may also result in supply chain disruptions.
Though one cannot completely avoid supply chain interruptions especially when nature plays a spoilsport, effective supply chain management can help reduce the impact and loss to the company.
Monitor delivery performance
The interruption in the supply chain system may also be caused due to the mistakes or lack of proper planning on the supplier's or manufacturer's part. Late deliveries, late availability of technical support, enhanced use of expedited freight, delayed reporting and resolving of production issues, product quality not meeting standards and accelerated payment terms are some of the issues that put up barriers in the supply chain system.
These issues can be avoided with better coordination among different departments and advance preparation for contingencies.
Leverage a third party logistics company
If you don't have your own logistics, prefer to take the services of a professional third party logistics company. Make sure you have enquired about the reputation of the company. A professional logistics company possesses the manpower, technological know how and infrastructure to ensure a smooth and timely delivery of the products.
Stay Ready with a Back Up
The most effective way to reduce disruptions in supply chain is to keep ready a back for every process. For example, you should always source extra raw material than required for a phase of production and make sure it reaches your warehouse a week before the commencement of production to safeguard against sudden shortages.
Also, keep some buffer time while committing delivery time to the dealers/customers so as to accommodate any possible in-transit delays.
Bring Flexibility at Operational Level
Being flexible at operation level means you have the capability of creating increased capacity and decreasing inventory idleness.
Don't restrict your manufacturing plant to producing to one product or part. The capacity and ability to your manufacturing plant to produce more than one type of products helps you reduce the losses from supply chain disruption at the time when your other plant is not operational.
Fast Flow of Communication
The cost impact of disruptions on your business can be minimized if you are able to anticipate and respond quickly to the causes that lead to disruptions. For this, you need a free-flowing communication network across different channels of business ranging from the sourcing of raw material to the delivery of end product.
For example, if the delivery of product is delayed due to some unavoidable reasons the information should reach the concerned department in real time so that the necessary steps can be taken to minimize the delay. Do not forget to update the customer/dealer on the same.
To gain more insight into avoiding supply chain disruptions, a CEO peer group is good option to gain advice from. At CEO peer groups, also called as CEO associations, you can receive effective business leadership coaching that will help your business grow.