Business guide to Coronavirus

Five ways to navigate supply chain disruptions

COVID-19 has disrupted the global supply chain by shutting down manufacturers and suppliers in China, the U.S. and elsewhere.

There has never been a greater test put on manufacturing and supply chains around the world than today. It shows an urgent need and push for better agility, accessibility, and digitisation in the supply chain and manufacturing operations. Here are five tips on how to overcome this disruption to get your business up and running as smoothly as possible.

1. Conduct an internal supply chain audit

An internal supply chain audit is a great way to evaluate and possibly improve your supply chain, reduce operations costs and increase competitive advantages where possible during these times. 

The goal of the audit is to help you find weaknesses within your supply chain and correct pain points, bottlenecks to increase supply chain flexibility, agility, and overall efficiency.

Identifying bottlenecks can result from reviewing:

  • customer relationship management 
  • supplier relationship management 
  • demand management
  • order fulfilment 
  • returns management process

2. Diversify suppliers

Diversification sounds easy, but finding an alternative manufacturer or distributor can be difficult depending on the product.

With many suppliers and products originating from China, finding an alternative outside of China is tricky but not impossible. It will likely cost about 150% more depending on where you source, but diversification has its upsides such as shorter shipping times, possibly lower minimum orders, cheaper return and replacement costs.

Sources for alternative suppliers include Amazon Business and Alibaba.

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3. Look into alternate manufacturing methods

Some supply chains, along with their manufacturing processes are under serious threat or even in lockdown. Others may be recovering from the severe disruption since the COVID-19 outbreak and overwhelmed by demand. 

It may be worthwhile looking into newer technologies. Where supply chains are digitally enabled, there is greater visibility in real-time. Therefore, a backup plan can be quickly deployed. 

Unfortunately, many supply chains are not digitally enabled and have been shown to be less robust in times of great stress. However, technologies such as 3D printing, which can offer flexibility, agility and capacity may be worthwhile looking into. Other technologies like computer numerical control (CNC) can be used to replace parts that come from more heavily tooled industries. 

Switching to a different manufacturing method could mean the difference in getting a part and getting on with business.

Those that are agile have adapted, shifted resources, and moved manufacturing to ensure continuity of supply. If a company is making critical equipment or consumables that are used in medical or testing processes, those supply chains need to be robust. And if something happens, they need to be able to adapt at lightning speed to ensure that a disrupted supply chain does not mean failure to deliver.

4. Substitute products just to get through

Another option for overcoming supply chain disruption is to launch new products. It’s a good idea to analyse customers’ purchase history and then choosing complementary or similar goods which will help them. For example, a business selling healthy meals online could start to sell health supplements like protein powders. 

5. Keep a close eye on your stock levels

During these pressing times, many businesses usually avoid buying too much stock, however, the ‘just-in-time’ strategy doesn’t always work, especially when suppliers cannot ship the products due to lockdown. 

It is important to understand the demand impact specific to your business and industry.

Businesses will need to prepare for potential channel shifts by checking where stock is moving most and redistribute. 

It’s important to increase forecast early on to fast-track the right signals to manufacturing. Businesses will need to accept there may be shortages, so it’s recommended to continue to keep communicating to manage expectations. 

Business Australia is on hand with a range of resources to help businesses navigate this difficult time, with practical advice and information to help you develop strategies to maintain and sustain. Visit our resource hub to find out more.

Catherine Ngo

Senior Editor and Content Writer, Business Australia

Catherine is passionate about unravelling the latest news and insights to help entrepreneurs, small business owners and employers.

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