7 ways to reduce exposure to supply chain risk and strengthen operational systems


David Ridley

(Header photo by Elevate on Unsplash)

Vulnerable supply chains can be disrupted making products and services unavailable.

There are always risks to the supply chain, currently many are disrupted by the effects of COVID-19. Risks change often but taking proactive measures will always help.

Here are 7 ways to reduce exposure to supply chain risk and strengthen operational systems during COVID-19 and other times.

1. Make the first move

Many closed suppliers are waiting for the green light to start up again due to COVID-19.

Can you provide the order they need to get going and supply you?

2. Dual source

Identify your critical products and services and find additional suppliers to provide a back up. 

3. Increase inventory

Methods like just-in-time can work, but sometimes more slack is needed in systems to sustain  disruption. Reviewing your inventory requirements and increasing inventory may be the right choice, especially for critical products.

Consider the inventory levels required as well as lead times and typical quality issues.  

Remember to consider long term inventory requirements like aftercare or spares.

4. Consider location

Sourcing closer to home may bring increased costs but reduced logistical risk. Find the right balance.

5. Dependence

Consider your dependence on suppliers, could you prepare to supply in-house if needed?

Often you will be able to produce certain products and services yourself in emergencies.

Consider what training, inventory and equipment could be required if you plan to do this. 

6. Manage demand

Try to predict volatile sales numbers by speaking to customers about their upcoming needs.

The more you know about the situation the better you’ll be able to prepare and take action.

7. Cash and working capital

Review what you need to survive temporary issues.

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Get support from Ridley & Company

Ridley & Company are experienced in implementing and improving management systems. If you are preparing to improve your supply chain and need some support, Ridley & Company can help.

Contact us to see how we can help you implement, improve and maintain an effective supply chain.