5 Supply Chain Risks to Keep in Mind
Keep Your Supply Chain Safe by Avoiding These Risks
Let’s face it. Risk permeates supply chains. There are so many moving parts in a typical supply chain, chances are something will go wrong at some point. However, if you understand your supply chain risks, then you can take proactive steps to mitigate those risks.
At Taylored Fulfillment Services, we’re supply chain experts. We wanted to share five supply chain risks you should be aware of in order to keep your business running smoothly.
Risk #1: Demand Risk
Demand risk refers to the fluctuation of supply and demand in your supply chain. It’s not easy to predict. Your customers’ appetite for certain products may increase or diminish without warning. Their spending habits can change on a dime. Even the best sales forecasters have a tough time accounting for every contingency, and that could lead to product surpluses, shipping delays, and inventory inaccuracies.
The Solution: Invest in robust analytics software. Today’s inventory management software gives incredibly precise data about your supply chain and makes accurate sales predictions. This enables you to more adequately prepare for future demand or a sales slowdown.
Risk #2: Labor Risks
Labor regulations, employee turnover rates, and worksite injuries can all impact your workforce and potentially cause interruptions to your supply chain.
The Solution: You can mitigate labor risks by understanding and meeting the needs and wants of your current workforce, which will help increase retention. Continued safety training and enforcement of safety policies can help reduce worker injury and absence. At the same time, gain an understanding of who’s looking for careers in your field, and meet their needs as well.
Risk #3: Cybercrime
Any company that is not proactively protecting themselves from cyberattacks is courting disaster. A single security breach could shut down your supply chain and ruin your reputation. Just look at today’s headlines. The largest firms in the world and even governments are being hacked as criminals look for customers’ personal data, credit card numbers, as well as proprietary information.
The Solution: The answer to supply chain security can be found in the cloud. By handing cybersecurity off to a third-party cloud-based service provider, you can trust that your supply chain is being protected 24/7 by experts who have the latest anti-hacker technology and know how to use it.
Risk #4: Natural Disasters
Talk about unpredictable risks! Natural disasters can wreak havoc on your supply chain and require weeks of recovery depending on the severity of the damage.
The Solution: The latest trend in business continuation is cloud-based disaster recovery plans. Cloud systems can be replicated in multiple locations around the globe, so if one site goes down, traffic is automatically routed to the next available one. This means your data is protected and goods can keep flowing through your supply chain—even in the case of natural disasters.
Risk #5: Political Risk
Any discussion on supply chain risks must include political risks. If the raw materials for your product are received from a foreign power, for example, it may be subject to taxes, duties, and tariffs, plus scrutiny from Customs. The possibility of the United States imposing sanctions on certain trade partners adds another layer of unpredictability.
The Solution: Stay informed. Understand the political realities of the countries where your firm’s raw materials come from as well their relationship with the United States. Also, consider diversifying your suppliers. That way if global political activity impacts your relationship with one supplier, then you’ll have others, either domestically or internationally, who can help fill the gap.
When it comes to supply chain management, no one knows what tomorrow will bring. You may not be able to protect against every little hiccup that may occur in your supply chain, but there are many ways you can reduce your risk of experiencing major problems.
If you are concerned about risks to your supply chain, then contact Taylored Fulfillment Services to talk about solutions. We’re a fully integrated third-party logistics provider specializing in wholesale, retail, and direct-to-consumer unit fulfillment. Headquartered in Iselin, New Jersey, we operate 1.5 million square feet of warehouse and distribution space strategically located near the nation’s busiest ports, including Los Angeles, Long Beach, and New York.