Breakdowns in production and distribution has become increasingly common as the global landscape seeks to manage the Coronavirus outbreak. With this supply chain disruption, many manufacturers and industrial plants are left scrambling with lack of inventory of important components for their production. Though these situations are unprecedented, there are measures you can take to be prepared when the global supply chain faces challenges.
- Outline supplier alternatives. If you source most of your material overseas, it’s a good idea to find a supplier or two domestically that can fulfill your material orders short term if need be. In this instance, availability trumps price. Sourcing domestically in the US tends to be more expensive, however, in the event of complete supply chain breakdown, the ability to receive your needed material at all is pivotal to avoiding total production shutdown.
- Create inventory reserve. Generally, businesses seek to lessen inventory for financial benefits. However, stocking an inventory repository can put you ahead of the competition in preparedness for supply chain disruptions. Through proper budgeting and supplier bulk discount strategies, your operations could feasibly stockpile inventory at an affordable cost. These measures will ensure your production is prepared for any supply chain interruption and help you to continue production in such an event.
- Sell strategically. The idea behind selling strategically is to prioritize your biggest customers for your limited inventory. Offer other non-limited products to your common customer base at a discount or incentive to free up the constrained inventory. This will ensure you maintain your high gross-profit customers and seeks to create value through savings for your other customers during that time.
Supply chain disruptions are uncommon, but as we know, they do happen and they can stretch far and wide for an uncertain timeframe. Being prepared is the difference between continued profitability and production and catastrophic profit loss and forced downtime.