After the numerous challenges caused by the pandemic began to subside last year, many business leaders and analysts assumed supply chain issues would decrease moving into 2024.
Unfortunately, disruption still abounds, caused by problems at major trade corridors and continuing geopolitical tensions. This year, organizations will still need to take strategic measures to ensure they’re protecting and strengthening their supply chains, or face serious repercussions. After all, studies show that disrupted supply chains can lead companies to lose up to 10% of their annual revenue.
While it’s difficult to predict and mitigate every potential supply chain issue that may emerge in the years ahead, there are steps companies can take to defend themselves against major disruption. Here are just some of the ways brands can prevent or reduce supply chain problems this year.
Supply of goods, logistics – illustrative photo. Image credit: Andy Li via Unsplash, free license
Step 1: Increase Visibility through Digital Freight Forwarding
Limited visibility is one of the most significant factors contributing to supply chain disruption. Every supply chain, no matter how simple it appears, has multiple potential points of failure. Continuous diagnostic action is necessary to identify potential risks and then to mitigate them quickly.
Digital tools can help to eliminate these issues. For instance, rather than managing your freight forwarding process manually, a digital freight forwarding partner can offer extra visibility into your supply chain and logistics strategies. These companies grant you insight into real-time shipping rates, so you can plan shipments in a more cost-effective way. They can even provide access to order tracking tools, so you can monitor your shipments in real time. This increased visibility can ensure you can make rapid changes to your supply chain strategy when issues occur.
Plus, it’s a great way to ensure you have accurate data you can share with your consumers when disruptions happen. Keeping your customers informed is important for preserving their trust and loyalty during difficult times.
Step 2: Upgrade your Technology Stack
Ever-changing conditions in the supply chain require companies to make rapid changes to their supply chain and shipping strategies. Congestion at a port, issues with a supplier, or problems at border controls can all lead to lengthy delays if you don’t respond quickly.
Embracing digital transformation can help build up supply chain resilience. Just as intuitive software and digital tools can help improve visibility into your supply chain, it can also help you adapt rapidly to changing circumstances. For instance, inventory management tools enhanced with AI and machine learning can help forecast inventory demand and pinpoint potential supplier challenges.
Some AI solutions can even help you plan dynamic rerouting strategies for shipments, optimize load pooling, or improve the way you organize warehouses, to make loading shipments and tracking leftover inventory more effective.
Look carefully at the current manual processes that are making it difficult for you to run an adaptable supply chain, and consider implementing digital tools that can minimize those roadblocks.
Step 3: Hold More Inventory
One excellent way to tackle complex supply chain challenges is to make sure you have access to extra inventory. When trade routes are disrupted and suppliers can’t reach you, you could find yourself missing out on essential sales and revenue.
Holding extra inventory is a good way to ensure you can avoid placing the “out of stock” banner on your website. However, it’s important to ensure you’re investing in the right inventory. This means taking a data-driven approach. Use the reporting and inventory management tools you have to carefully collect insights into your best-selling and most popular products.
Think about how long you can reasonably hold certain amounts of stock before they need to be discarded (this is particularly crucial for perishable products). As mentioned above, AI tools can help you to make more intelligent decisions about where you should increase and reduce inventory levels.
Step 4: Diversify Supply Sources
Sometimes, simply holding large amounts of extra inventory isn’t an option. If you run a business that relies heavily on seasonal trends (such as a fashion company) or sells perishable products, you can’t stock up on extra items ahead of time. The best way to reduce your risk of disruption in this situation is to make sure you have access to multiple suppliers.
Building relationships with a variety of reliable suppliers, who can consistently deliver products and materials when your primary supplier isn’t available, improves your resilience. It means that if your current supplier is affected by unexpected issues, like a regional conflict or natural disaster, you don’t have to put your sales strategy on hold.
Remember, it’s important to commit to building strong relationships with each supplier you use. Consistently collaborating and communicating with suppliers will help you earn their trust, and so boost your chances of getting better rates and prices on your orders.
Step 5: Tackle Excessive Returns
Finally, excessive returns aren’t just problematic for your bottom line. They can have a negative impact on your brand’s reputation, as well as causing significant supply chain strain. Not to mention that they mean more work for your warehouse managers and inventory experts.
While it’s impossible to eliminate returns from your business completely, there are ways you can begin to reduce return rates. For instance, creating more detailed product descriptions on your website, sharing clear product pictures, and helping customers make the right purchasing decisions with AI recommendations, can reduce problematic impulse purchases.
You can even look for innovative ways to bring products to life, like including demonstration videos and augmented reality visuals on your site. Another option is to allow customers to return items to physical retail stores, rather than asking them to send them via mail.
Preventing Supply Chain Issues in 2024
Supply chains are notoriously unpredictable. It’s easy for many factors, from geopolitical turmoil to extreme weather events, to have a negative impact on your business. While you might not be able to prevent every issue that could affect your supply chain, you can implement strategies that give you more visibility, control, and resilience in 2024.
Use the strategies above to boost your chances of a more efficient, cost-effective, and robust supply chain, and strengthen your relationships with customers.