Supply chain disruption can wreak havoc for businesses, and unfortunately over the past few years, the UK has seen its fair share of upset to supply chains. The pandemic has been one reason for this, alongside the ongoing impact of Brexit. In addition to this, rising inflation is playing a key role in causing disturbances along the supply chain. So what can businesses do to help minimise the impact of this? There are practical steps you can take to protect your company. These are our top tips for how to handle supply chain disruptions:
Create A Contingency Plan For Supply Chain Emergencies
The best way to futureproof your company for supply chain disruptions is to come up with a comprehensive contingency plan. This involves identifying every stage of your supply chain and looking at alternative options if that stage were to be disrupted. Think about alternative ways you can move goods around and maybe consider setting aside an emergency budget for this if you’re able to. A contingency plan may include how to notify customers of the disruption, how to estimate available inventory and how you can get backup inventory.
Conduct A Supply Chain Vulnerability Audit
A crucial part of creating a contingency plan is identifying where the weakest links in your supply chain are. This involves looking at how vital each point of the chain is and the potential risks to each of these i.e. what environmental, social and political conditions may impact your supply routes. You may find it helpful to identify “high risk” vs “low risk” points in order to determine where you need to focus your contingency plan efforts and the measures you can put in place to help manage these risks.
Build Up Inventory
Another key part of how to handle supply chain disruptions is creating a stockpile of essential supplies that will see you through any emergency periods. Having extra quantities of goods, finished products, parts and raw materials may help you survive periods in which your supply is temporarily cut off. Building up inventory is of course an added expense, and so some small businesses may struggle with this. A good tip to help with this is increasing your inventory whenever your business expands or launches a new product, so that you’re stocking up on goods at that time anyway.
Identify Backup Suppliers & Diversify Your Supply Base
It’s essential to avoid becoming overly reliant on a narrow base of suppliers as this can cause huge problems should any of these run into difficulty. With this in mind, an essential step in how to handle supply chain disruptions is identifying backup suppliers and diversifying your supply base. Identify suppliers you can rely on in the event you cannot use your main supplier. In addition to this, make sure that you’ve got suppliers in different locations so that you can always access the goods you need in the event of unexpected economic, social, political or environmental events.
Monitor Your Cash Flow
Another really important aspect of how to handle supply chain disruptions that’s often overlooked is monitoring your cash flow closely. This is important for general business all year round, however it’s also really important for ensuring you have a stable enough cash flow to survive supply chain problems. Being able to make accurate cash flow forecasts is essential for knowing how you will cope if you cannot gain access to the goods you need. Look at the cost to the business that these disruptions might cause, where you can boost your cash flow in preparation, and how you may be able to gain access to short term financial support should you need it.
What To Do If Your Business Is Struggling
Being proactive is a key part of how to handle supply chain disruptions, however if your business is struggling as a result of the disruption caused, there is help available. Our experienced team of business recovery experts at Ballard Business Recovery can talk you through the options that may be available to help get your company back on track. Please don’t hesitate to get in touch with us to discuss your requirements.
