Can Your Upstream Handle Supply Chain Disruptions?

A lot of the major supply chain disruptions that happen, generally originate from far upstream. In fact, they often begin so far upstream that retailers don’t have direct contact with the actual suppliers. It could be your producer’s supplier’s supplier who gets their plastic resin from China, which is now seeing a trade holdup. Since they can’t import from China right now, no other partners can do any of the work in the following tiers of the chain.

This is why we need to look at the supply chain comprehensively to see where risks and disruptions are most likely to occur. 

If you’ve also had stressors on your supply chain, you’re certainly not alone. The majority of organizations have run into serious disruptions. For some businesses, these disruptions could mean major revenue loss until they team up with partners such as Redwood to help them integrate the best solutions to resolve the issue.

What can you do to mitigate disruptions, manage risk, and have a more resilient supply chain? 

What to do Right Now? 

Unfortunately, if you’re stuck in a hold up now, it’s not likely you’ll see overnight changes. With COVID-19, business is temporarily on hold and making any changes in suppliers has been a challenge (if not impossible entirely). 

The best thing you can do is create a risk framework to proactively minimize disruptions in the future. This may also allow you to create guidelines that can help you address current potential concerns with a level-head and clear objective. It might take some time to implement but now is better than never to implement.   

Understand Potential Risks

You want to build a risk management framework that incorporates key risk triggers. Addressing risks is critical to ensuring the health of your supply chain’s upstream and downstream. 

How to best understand the potential risks your business faces:

• Collect internal data on all disruptions. Any time you run into delays in production, record it (ideally with an artificial intelligence system) so you can utilize it for predictive analysis of future risks. 
• Use external data from industry models. Consider the risks that other partners or industry players have run into. 
• Read academic studies about risk factors in your industry or region. 
• Don’t neglect less common risk factors, like a global pandemic, a trade war, or national disasters. 
• Work with an agency that specializes in risk assessment and management. 
• Use technology to perform root cause analysis and scenario modeling to evaluate all risks. 

Create a Contingency Plan in the Event of Supply Chain Disruptions

Once you’ve identified the most prevalent supply chain risks, you’ll want to create a plan to prevent and address these disruptions. We call this a “resiliency plan” or “disaster recovery plan.” Consider how you’ll respond to key triggers and establish guidelines for addressing problems. 

Resiliency plans are especially important for international and global trade. It’s hard to control for all the external factors—from tariff changes to a hurricane slowing down ocean shipments. You want to create a highly inclusive plan that addresses every possible risk (like a pandemic). 

Ensure Partners Have Comprehensive Risk Management Programs

Work with your supply chain partners—both upstream and downstream—to create similar risk management programs. Discuss how your organizations plan to work together to handle certain risks and make sure they’re on board with your risk management ideas. All partners need to agree on a plan in order for it to work. 

If a partner isn’t willing to consider risk management strategies, they likely won’t be reliable in a crisis. You might want to consider working with other partners. A risk management plan demonstrates a strong, healthy company. 

Implement Predictive Artificial Intelligence

Artificial intelligence and machine-learning software can analyze all the internal and external data to create risk management strategies. It will also predict risks, create initiation triggers, and offer real-time recommendations for resiliency options. AI is an effective way to address potential risks before they come to fruition.   

Redwood Logistics has access to advanced technologies that can assist your supply chain from start to finish, including using AI to predict your business’s needs. Check out our innovative services here. 

Learn how AI is driving supply chain management. 

Source From Multiple Partners

Diversifying your portfolio is one of the best risk management methods. You don’t want to put all your eggs in one basket. If that basket drops, you’re out of eggs entirely. You want to at least have a 75-25 split, where a minimum of 25% of your goods or material come from another source other than your primary. If possible, two or three sources at minimum for your product array can ensure your entire business doesn’t shut down in the case of a disruption. 

You may also want to talk to your primary partners to see if they have a source split. If your partners only source materials from one area or only have one delivery option, you could end up with holdups as well. 

Naturally, more partners in your supply network generally requires greater logistical cooperation, though. Consult with Redwood Logistics for a custom solution to streamline your network, no matter how many partners you have. 

Map Your Partners’ Sites

Create a map of where your supply chain’s warehouses, distribution, manufacturing, and storage sites are. Make sure they’re not all in the same region, like all in the same foreign country. This ensures that if that country were to enter into a trade war with the U.S.A. or hit by a natural disaster, your business wouldn’t be entirely dependent on that region’s goods. Like sourcing from multiple partners, you also want to source from multiple geographic areas. 

Utilize Blockchain Technology 

Blockchain connects all partners along the supply chain with cloud-based data. This creates a high level of transparency, so you can monitor and communicate with all partners 24/7. If you want to stop disruptions before they happen, blockchain technology can help you see risks and errors ahead of time. The more data you have access to, the lower the risk. Learn about how blockchain is revolutionizing the supply chain here.

Get Insurance

You want to make sure your business has enough commercial insurance to cover profits lost from any sort of disruptive event. This protects your business in the case of significant incidents that cause businesses to halt—like a pandemic.

Work with an insurance agent to make sure you have enough loss of income coverage on your business’s policy. 

Conclusion

Business continuity is business strength. The goal is to maintain a resolute supply chain, no matter what external factors may try to impact your logistics. 

Our goal at Redwood Logistics is to provide custom solutions for your supply chain. We can help you create a proactive risk management plan, so you can continue doing business no matter the state of the world. 

Contact us for your free consultation about your business’s needs and custom solutions to start creating an invincible supply chain that can withstand the storm.