How Can we Reduce our Supply Chain Risk?

Read time: 3 minutes

I recently gave my comments on the red sea crisis and its impact on the supply chain. It prompted me to write this article and focus on ways we can reduce the risk of unforeseen events.

Having a plan B, and plan C when it comes to our supply chain allows us to capitalise when others can’t, reduces any potential down time, and helps us to be a lot more consistent and reliable.

Often, we fall guilty of assuming everything will carry on as it is, that goods will arrive on time, won’t be subject to delays, and so we don’t worry about contingencies.

I get it, a lot of the time, things do go smoothly, but we can avoid the mad scramble to fix problems when they do arise with a few simple steps.

We will cover:

1. Creating Effective Backup Plans

2. Diversifying Suppliers

3. Risk Management Strategy Reviews

4. Clear Communication

“Failing to Plan is Planning to Fail” – Benjamin Franklin

Creating Effective Backup Plans

Start by identifying key parts of the supply chain that could cause a big problem if they were disrupted. Once we know where the risks are, we can make Plan B and Plan C for those areas.

For example, what happens when we rely too heavily on one continent or country for our material, and problems arise with those shipping lines…

Diversifying Suppliers

Don’t put all our eggs in one basket. Having different suppliers for the same materials saves us a lot of headaches. This way, if one supplier faces a problem, we can quickly switch to another without missing a beat. It’s also good for keeping suppliers honest, competition is healthy after all.

I’d also encourage you to think about it from a geographic perspective. Do we have supply options from multiple continents which utilise different shipping lanes and routes? Do we have a more local manufacturer? Yes, they may be more expensive, but there are plenty of benefits to having more local supply options…

Regularly Assessing and Updating Risk Management Strategies

Yes, I know, your eyes are probably rolling into the back of your head when you see the words ‘Risk Management’. But every few months, at least until well embedded, we should be looking at our supply chain and seeing what has changed, and are there any new risks we hadn’t thought about. We then need to check if our backup plans and alternative suppliers are still suitable or not.

Although it may feel like a chore, these exercises actually save us time in the long run.

Clear Communication with Supply Chain

Sounds obvious, but make sure you are communicating regularly with your suppliers and logistics service providers about potential risks and to know where your goods are on their journey. The earlier you know about a problem, the sooner you can handle it.

Why not proactivley check your products arrived at the port / the customer / the CMO? Rather than hearing they’re late after the fact.

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As ever, there is plenty more nuance to supply chain risk management, but only so much time I want to steal from you.

So, don’t wait for another disruption to serve as a reminder that contingencies need to be put in place now for risk mitigation.

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Thanks for reading, and see you next week.

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