On Minimizing Everyday Supply Chain Problems

There’s nothing you can to stop big supply chain problems. Natural disasters come to mind.

But as a retailer or a light manufacturer, you rely on getting orders in on time, always having ample inventory for your customers.

Getting caught short of materials or products may result in you stocking out and missing sales. This will have a negative impact on your cash flow.

So what can small and medium sized businesses do to limit the damage when a third-party supplier fails to deliver?

Planning Ahead is The Best Response

Companies of all sizes have to contend with third-party supply chain problems.

Supply Chain Brain recently wrote about the financial risk to a company if a supplier fails to deliver. The problem with risk management is that a lot of suppliers are private companies that don’t make their financial status public. Companies then will have a hard time knowing if their suppliers will still be in business in the future.

Supply Chain Brain reports that the majority of companies experience some kind of disruptive incident involving a supply chain partners. The publication cites a July 2016 survey in which. 87% of companies report having experienced a “disruptive incident” with third parties over the previous three years.

Half of those problems involved direct suppliers. The report does not specify the nature of these disruptions. Presumably, most disruptions will not be fatal, but still costly.

A realtime inventory management solution with easy to read reports can minimize the impact of everyday disruptions.

Reports will help you with inventory planning. The reports can tell you which of your SKUs are selling well, and which are not. The rule of thumb is the less inventory are carrying, the better your cash flow. Reports then will allow you to plan your supply purchases according to your optimum stock level. You can determine how much safety stock you’ll need in the event of a disruption.

A realtime inventory management will also let you track deliveries you expect from your suppliers.