In recent years, factors such as the COVID-19 pandemic, labor shortages, natural disasters, and production issues have contributed to supply chain disruptions worldwide, impacting high-end consumer products and basic commodities, such as generic drugs and energy. Below are some suggestions for how businesses can limit their exposure to supply chain disruptions:
Diversify supplier base.
Using a single supplier can disrupt a business’s entire supply chain should an issue arise. Having a diverse supplier base disperses the risk and reduces risk impact.
Have backup suppliers and vendors.
There are several reasons a supplier may be unable to complete an order, including unprecedented demand or issues with their own supply chain. Organizations should identify suitable suppliers to use should problems occur with the primary supplier.
Prepare a risk management plan.
Organizations should identify and assess all current and potential risks that could disrupt business supply chains. Preparing procedures and responses for risks and building flexibility into business processes will help them adapt to disruptions.
Aim for end-to-end supply chain visibility.
Supply chains typically involve many operational stages, each with its own risks and challenges. Supply chain visibility can help mitigate risks by tracking progress and ensuring quick responses to any issues.
Invest in cybersecurity.
The most common risks affecting supply chains include data leaks, breaches, and malware attacks. Businesses should assess and improve current cybersecurity measures to mitigate supply chain risks.
Purchase coverage.
Specialty insurance policies can help businesses recover during a supply chain disruption.
Businesses should be proactive in identifying and preventing supply chain disruptions. For more information, contact us today.
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