Your Supply Chain: Six Proactive Steps to Take Now

By Tom Cramer

One of the realities of running a small to mid-sized enterprise is learning that one of your primary challenges is learning to respond to change. It is the nature of experience that our outlooks are shaped by those changes and how we react to them. We quickly learn that the current “crisis” is not an interruption of normal that will be resolved and go back to the way things were. Rather, gaining the skills of managing and thriving through successive crises is what often separates successful ventures from failures or mediocre businesses.

Frying Pans and Fires

We are now seeing the current proof of that perspective. Many hoped that when the post-pandemic situation would return things to “normal.” However, the growing impact of inflation and continuing uncertainties about the supply chain (see Understanding Your Supply Chain: Why it Matters) require us to adapt to a “new normal.”

It is a valuable tool when you, as the leader of your organization, respond to these challenges as unique opportunities to excel rather than a time to feel discouraged. When everyone in your market is facing the same challenges, it merely becomes a potential competitive advantage when you overcome those challenges more quickly and more effectively than your competitors. 

Addressing Your Supply Chain: 6 Tips

The fact that inflation is the pressing issue of Q2 2022. Covid was that issue Q2 2021. Whatever quarter you are reading this now or in the future, your business will be facing some other “unique” crisis. However, using this time to focus on forever changes in how you manage your supply chain will provide an ongoing long-term return. 

Here are six practical tips for proactive steps:

1. Dynamically manage your inventory and raw materials. Whether you deal with finished products or use components to construct products, it is inventory that keeps you shipping to customers. Many companies are now reevaluating lean inventory and just-in-time inventory strategies and how they affect their ability to meet customer demand. Instead of merely looking at numbers, think through what you need to keep shipping for as many as six months to keep customers happy.
2. Seek advice and carefully evaluate the relative merits of carrying more inventory versus the cost of doing so and the potential loss of customers. In today’s environment, many rules of thumb are being cast aside. Changes may be required but avoid any knee-jerk reactions to the immediate situation.
3. Build up your “Plan B” providers. Consider the wisdom of avoiding single-source vendors that can cut off your supplies overnight. Buying a portion of your inventory needs from alternate vendors and developing back-up providers may help cushion industry shortages.
4. Once you have reevaluated reasonable inventory levels and alternate suppliers, consider investing in Supply Chain Management (SCM) software. This is an increasingly active niche that provides cloud-based integration with your other financial and management resources.
5. Maintain an active dialogue with your customers. Instead of simply putting an “out of stock” notice on your website, ensure your entire marketing and sales team is actively engaged with customers to understand and react to their needs and concerns. Act early to deal with potential allocations and shortages, and keep customers updated if and when those shortages hit.
6. Study Your Supply Chain. Take time with your team to “whiteboard” all the critical points in sourcing your inventory and supplies. Determine which elements are most vulnerable to weather disasters, shipping delays, wars or other political interruptions, and other factors. This may lead you to up your stockpile of certain items more than your general inventory.

Surprises are one of your worst enemies. Every step you take to avoid surprises and to prepare to survive them is a proactive step to protecting your business for your team and your customers.