Diving into supply chain disruptions

by | Jul 2, 2024 | Inventory Management, Order Fulfillment, Suppliers

Supply chain disruptions are often unpredictable and can be costly to the supplier—not only in terms of money, but also due to the valuable time and resources required to overcome these obstacles.

In today’s competitive, global supply chain, suppliers continue to face disruptions at various points in their supply chain, including challenges around sourcing products or materials, receiving products from overseas and shipping the products to end consumers. There’s a ton of pressure to ensure materials and inventory arrive at the right time and in the right place so that the brand can be paid and continue serving the needs of their trading partners and consumers.

What can cause a supply chain disruption?

The benefit of having a wide-reaching supply chain is clear: your products and materials are sourced from anywhere you want, which gives you the opportunity to supply products that fit the bill of customer demand. Unfortunately, the disadvantage of having a dynamic supply chain is the variability of so many factors outside of your control.

Supply chain disruptions can be caused by a variety of factors, including:

Procurement obstacles

Difficulty obtaining materials required for production can trickle down into the rest of your supply chain. Often, material procurement challenges stem from another company’s shortages—in some way or another—which is completely out of your control. You’re left to find another vendor or wait until the materials become available again, delaying your output either way.

Natural disasters

Storms, flooding, earthquakes and other natural disasters can affect the availability of raw materials as well as delay fulfillment and shipping of the items. In severe cases, warehouses and production sites can be destroyed or rendered unusable. When it comes to freight disruptions, road, port or airport closures can lead to extreme delays in fulfillment.

Staffing shortages

Between the high cost of labor and the declining number of people who make up the workforce, staffing shortages can affect almost every part of the supply chain. If a 3PL doesn’t have enough employees working, there can be delays in fulfillment. If a manufacturer doesn’t have enough workers, fewer items are produced. Plus, it’s important to keep track of international staffing disruptions if you’re working on a global scale. Certain holidays require planning ahead so you can still complete transactions with trading partners who may be temporarily delayed or short-staffed.

International conflict and changes

International economic changes (like law changes, currency and tariff fluctuation and geopolitical tensions) have a massive effect on the supply chain. These challenges can arise in any area of the supply chain, including increased difficulty in procuring raw materials, warehouse and storage shortages and skyrocketed costs to conduct business as usual. For example, a change in import or export cost could force a supplier to adopt a completely new partner and strategy for sourcing goods.

How do supply chain disruptions affect suppliers?

Without guarantees that the end-consumer will receive their product when and where they want it, suppliers suffer, especially when the cause of the disruption is out of their control.

To alleviate the impact of supply chain disruptions on their business and keep consumers happy, suppliers need a solid understanding of where the product is in its lifecycle at any given point in time. This could be knowledge that a certain raw material is on backorder or that a product is held up at a specific port. Unfortunately, many suppliers don’t have the supply chain visibility they need, leading to delays, confusion and unhappy customers.

How can suppliers prepare for supply chain disruptions?

With deeper insights, suppliers can gain a better understanding of what’s coming down the line and prepare in advance for the worst-case scenario. SPS Commerce Analytics, for example, helps suppliers analyze sell-through data to make more informed decisions about item forecasting. With the ability to make data-driven decisions like these, suppliers prevent stock outs and avoid other negative impacts of supply chain disruptions.

By adopting a comprehensive solution that provides clear, immediate insight into order status, delays and obstacles, brands can rearrange their processes to ensure their end-consumer isn’t affected. There are a few main considerations for suppliers to keep in mind when it comes to supply chain disruptions:

Preparedness: Increased agility and responsiveness to data insights can improve supply chain preparedness. By closely tracking trends and understanding how other parts of your supply chain function, you can proactively make decisions that will help you down the line. This way, you’re getting ahead of potential obstacles instead of reacting to them as they happen.

Vendor diversification: If you know you need a certain quantity of a raw material, but the last time you placed the order there was a delay due to an ongoing natural disaster, it’s good to have a backup option or give plenty of extra time to the vendor.

Complete communication: When you send and receive EDI documents with immediate, accessible and accurate data, it’s easier to keep an eye on how things are going at each point in the supply chain. Take a closer look at Fulfillment from SPS Commerce—you’ll have increased order visibility and benefit from simplified operations and smoother management of trading partner requirements.

Ready to get the conversation started? Reach out to one of our experts today.

Morgan Asplund