Robust supply chains are critical to businesses. When there are bottlenecks in the supply chain, customers don’t receive goods on time, suppliers aren’t paid promptly, and businesses lose money. For instance, in the wake of the COVID-19 pandemic, supply chain disruptions caused a lumber shortage. As a result, lumber manufacturers struggled to fulfill consumer demand, and contractors couldn’t deliver lumber on time.
While unforeseen contingencies that can disrupt supply chains, like the COVID-19 pandemic, are out of the control of businesses, here are seven effective ways to overcome supply chain delays should they happen.
Nearly 75% of U.S. businesses experienced supply chain delays due to the COVID-19 pandemic, according to a survey of 628 businesses by the Institute for Supply Management (ISM).
Natural disasters and pandemics like COVID-19 can cause an unprecedented spike in consumer demand for goods, leading to supply chain disruptions and delays. Still, businesses with supply chain contingency plans can cope better with supply chain disruptions and delays if they arise.
While supply chain contingency plans vary from one business to another, the prevention, preparedness, response, and recovery (PPRR) risk management model is a popular supply chain contingency plan used by many businesses. PPRR involves the following steps:
Often, specific points in the supply chain are weaker than others. That’s why businesses need to audit their supply chains to identify the most vulnerable points.
For instance, after performing a supply chain vulnerability audit, a business may discover it relies heavily on one supplier for a particular raw material. As a result, the business may decide to find alternative suppliers to mitigate potential supply chain delays if the supplier can’t supply the raw material.
When performing supply chain audits, businesses should consider classifying points in the supply chain as high, medium, or low risk to determine where the biggest vulnerabilities lie.
Many businesses keep minimal inventory to reduce storage costs and prevent goods from becoming obsolete. While keeping minimal inventory offers businesses several benefits, so can building it up.
Businesses that build up inventory have a lower risk of shortages. As a result, they can fulfill high consumer demand even if disruptions or delays in the supply chain occur.
Reliable suppliers are essential to a resilient supply chain. Businesses with dependable suppliers can fulfill orders faster and mitigate supply chain delays, so they should strive to maintain good relationships with suppliers they can rely on.
Providing reliable suppliers with incentives is an excellent way to build a strong relationship with them. For example, a business can offer to pay the supplier within 15 days rather than 30 days as an incentive.
Businesses need to keep track of inventory so that they can replenish it when it’s about to get depleted and avoid stockouts.
Inventory management solutions can enable businesses to keep track of all inventory from one central place and provide real-time updates on inventory levels so that businesses know when they need to restock.
Many companies rely on offshore suppliers for supplies. While offshore suppliers may be cheaper, companies that depend on them for supplies are at a higher risk of experiencing delays if there are disruptions in the supply chain.
Nearshoring supply by partnering with nearby suppliers can reduce lead times and minimize the effects of potential supply chain disruptions.
Performing accounts payable (AP) tasks manually can significantly slow down the AP workflow, which can cause delayed supplier payments. This can lead to supply chain delays.
An AP automation solution can accelerate the AP workflow and minimize supply chain delays by:
Supply chain disruptions cost businesses in the U.S. nearly 228 million annually, but AP automation can help businesses minimize supply chain delays and reduce losses. Contact Worldview today to schedule a demo of their AP automation solution.