How to Overcome Risks to Global Supply Chains
Risk is an unavoidable element in any enterprise, and shipping and warehousing operations are no exception. Although there are many ways to reduce your exposure to different types of risk, these potential sources go up dramatically the larger and further-reaching your supply chain becomes. Global supply chains come with an inordinate amount of moving parts, each of which is subject to different risk factors. As the size of the supply chain services grow, so too does the cost of any one part going down or suffering fault. Consequently, it is integral to have a risk management process for your global supply chain that can not only reduce your vulnerability to risk but also let you recover quickly should an adverse event arise.
Upgrade Your Warehouse
Two of the larger risks in global supply chain management concern quality and inventory. Long global supply lines make it harder to respond quickly to quality concerns since tracking down the problem becomes a more involved process. A long global supply chain can also cause a surprising amount of additional inventory that can catch warehouse operators by surprise.
Upgrading your warehousing operations helps manage both of these sources of risk. Quality control is part of inventory management during warehousing, so enhancing this area of logistics management will let you recognize potential problems before they reach customers and start the investigative process promptly. Warehousing upgrades also help manage excessive inventory. This can be accomplished by expanding storage space or by devising more efficient means of handling goods. In both cases, your costs associated with the extra inventory will manage to go down.
Get a Disaster Response Plan
Chances are, you already have a response plan in place if your main warehouse or similar location is struck by a flood, earthquake, fire, or other disaster, but what about the rest of your supply chain? Proper supply chain management means taking a good, hard look at the flow of goods throughout your chain and identifying points of vulnerability from natural disasters like earthquakes or tsunamis, especially in Asia if the past five years are any indication. You won’t be able to avoid getting hurt if part of your supply chain is struck by disaster, but you should not be left scrambling to come up with a response since “in the moment” is one of the worst times to have to formulate a plan.
Use Real-Time Tracking and Visibility
This is related to the above point about disasters. Information is crucial to recognizing and solving problems, and delays in obtaining that information can dramatically increase the cost of any given risk. Being able to harness visibility tools for global shipment and component tracking, ideally in real time, lets you get an immediate view on your current situation. Should a risk manifest itself, being able to get accurate, real-time data of when, where, and how much of your supplies are impacted is key to reacting appropriately.
Work with Strong, Competent Suppliers
Global supply chains are, by definition, subject to the market conditions of multiple countries. Your suppliers may do business with you, but they are as vulnerable to local factors as anyone else. One of the risks that supply chain management must address is the potential impact of this vulnerability. Working with suppliers you trust and know to be well run and financially sound helps reduce the uncertainty associated with this additional risk. Being able to trust that your supplier will still be able to operate in the event of market shocks or legislative changes helps maintain the integrity of your overall supply line.
Look to Lean Supply Solutions for Effective Supply Chain Management
Lean Supply Solutions is a third-party order fulfillment company in Toronto whose operations are based around the Lean Methodology, a proven philosophy focused on eliminating any operations, equipment, or resources that are not capable of adding value to clients’ supply chains. By striving to ensure that the right products are provided to the right customers at the right time, Lean Supply Solutions is able to offer consistent, accurate, and quality results.
To learn more about the Lean Methodology, outsourcing to Lean Supply Solutions, or to ask any questions, give us a call at 905-482-2590.