Supply chain uncertainty typically refers to unpredictable events that cause changes in fulfillment or profit. When this occurs, many businesses struggle to make decisions in response because it’s difficult to know what the results of those decisions will be.
Navigating supply chain uncertainty is challenging for most businesses because there are so many unknowns. Understanding what supply chain uncertainty may look like in your supply chain is a significant step toward effective navigation.
Types of Uncertainty in the Supply Chain
Every supply chain naturally has weaknesses. Understanding what those weaknesses and uncertainties are can help your business better prepare to navigate and reduce them.
Here are a few of the most common types of supply chain uncertainty.
1. Regulations
Many governments have regulations that allow them to monitor trade policies and relationships between local, regional and global supply chains. Various industries also enforce regulations for how certain products move throughout the supply chain.
For example, many industries utilize a chain of custody to track who’s been in contact with each shipment. Regulations can frequently change, making it difficult to remain consistently compliant for those without powerful compliance programs.
2. Cybersecurity
Cyberattacks are often directed at businesses or manufacturers in attempts to steal money and private information or otherwise disrupt operations. Infiltrated cyber defenses can create significant disruptions in the supply chain and even compromise other supply chain entities.
3. Consumer Pressure
Consumers have high standards for who they get products from and how those entities and businesses operate. If your business or any of your connected supply chain entities are implicated in negative news, unethical practices or other issues that come across poorly in the eyes of consumers, it’ll negatively affect your supply chain.
4. Weather Patterns
While meteorologists can somewhat predict the weather, unstable weather conditions increase uncertainty. The weather can significantly impact some aspects of the supply chain.
For example, products transported via air or sea can be delayed due to strong storms. More frequent natural disasters can also create supply chain uncertainty.
5. Labor Shortages
The supply chain relies on the workers that make each stage of the supply chain possible. Unfortunately, labor shortages across the supply chain have created significant uncertainty. Labor shortages result in delays, numerous logistical issues and increased costs. The uncertainty surrounding labor shortages is so high due to the unpredictability of the issue.
How to Reduce Supply Chain Risk
Supply chain uncertainties and disruptions are often unavoidable and out of your control. Fortunately, businesses and supply chain partners can reduce supply chain risks in several ways.
Here are a few ways your business can prepare for and reduce risks in your supply chain.
1. Regularly Evaluate and Review Current Risks
Supply chain uncertainty and risk can vary between industries and businesses. It’s important to evaluate your business’s current risks to identify areas of uncertainty so you can plan for your specific needs.
Determine what could cause uncertainties, especially when something changes in your supply chain. You should also regularly review risk scenarios to better prepare for disruptions and anticipate how to resolve them.
2. Ensure Supplier Quality
Working with high-quality suppliers and logistical partners can help to significantly reduce supply chain uncertainty and risk. The suppliers and partners you work with can directly reflect on your business and reputation.
For example, if your suppliers provide low-quality goods or source materials unethically and you use them for your manufacturing, it can reflect negatively on your business. Vetting potential suppliers thoroughly before partnering with them helps you to ensure quality.
3. Diversify Supplier Relationships
Rather than relying on a single source for all your goods and materials, consider diversifying your suppliers. Partner with suppliers in different regions of the world, especially when regarding backup suppliers. Having diverse partnerships can help alleviate some uncertainty when one supplier falls short.
4. Include Supply Chain Partners in Risk Planning
Risk planning can be much more effective when you include various parties from your supply chain.
Different aspects of the supply chain experience different risks and uncertainties, though their effects can be experienced throughout the supply chain. For example, if there are issues in the warehouse, shipments may be delayed, affecting delivery times and customer experiences.
Including your partners in your risk planning and evaluation can help ensure you account for uncertainties on their end and yours.
5. Increase Supply Chain Visibility
Increasing supply chain visibility improves your ability to monitor various legs of your supply chain. You’ll gain more insights into how your supply chain operates and can more effectively identify areas of concern.
With increased visibility, your business can better prepare for common uncertainties and potentially create solutions.
Supply Chain Best Practices
The supply chain can be challenging to navigate, especially when facing uncertainties. Following supply chain best practices can help you stay on track and achieve effective supply chain management.
Here are a few general supply chain tips to consider:
- Understand your customer: Understanding your customer is key to managing your supply chain. It’s important to know their current preferences and where their preferences may evolve. Determine what turns a customer’s preferences into a purchase and where your competitors may try to swoop in. Monitoring your customer’s actions and needs allows you to make supply chain decisions to create a positive customer experience.
- Be flexible: A strong supply chain is flexible. Because various factors are consistently changing, a flexible supply chain allows for some give and take. Where there’s uncertainty in one area, strength in other areas can help make up for it. Look at your supply chain as a continuous process of refinement and improvement. Consider where you have the most control and where you can merely influence.
- Integrate innovative digital solutions: Supply chain technology and digital solutions can significantly enhance visibility into your supply chain and how you manage it. Be sure to use innovative solutions that regularly update to reflect market changes and keep you from falling behind.
Trust EMO Trans for Your Supply Chain Needs
At Emo Trans, we understand that navigating supply chain uncertainty can be challenging. Whether you need help on the logistical end or the transportation end of the supply chain, Emo Trans has the years of experience necessary to provide global solutions for clients like you.
From global shipping and logistics to technology capabilities and compliance services, we offer comprehensive options to help you manage supply chain uncertainties effectively. Request a custom quote today to find out how we fit your needs.