Supply chain disruption occurs when unexpected problems with production or distribution jeopardize customer satisfaction, revenue growth and stock prices. For small businesses with limited capital, the consequences can be especially devastating. Without a steady flow of orders, companies are forced to raise prices or cut back on production capacity or lay off employees.
A variety of factors can lead to supply chain disruption, from natural disasters like hurricanes or wildfires that disrupt power and transportation systems to geopolitical conflicts that restrict trade and sudden shifts in consumer demand. Other causes include a lack of workforce capacity, weather conditions that limit farming or shipping and the expiration or loss of raw materials.
Often, a company’s ability to mitigate the impact of a disruption is determined by how well it understands the business process and how flexible its processes are. The COVID-19 pandemic taught the business world that global supply chains are fragile, and even a short delay can cause major damage.
While it’s impossible to prevent every supply disruption, resilient businesses strive for agility. They use technology tools and scenario planning to identify risks and make contingency plans. They also increase visibility into supplier and inventory data, improve forecasting and leverage multi-supplier strategies. Companies that prioritize flexibility and invest in training their teams for unexpected changes are better prepared to handle the next challenge. In this way, they can ensure customers receive the products they need and keep them satisfied for the long haul.