Supply chain problems can create big problems for your small business. That’s why it’s so important to take steps now, when things are fairly good, to minimize your exposure to risk. Risk is part of doing business. It’s the price you pay for competing on the local and/or global stage. However, minimizing risks – especially supply chain risks, helps you enjoy greater success in business. Making the right moves now can save you a great deal of time, stress, and pressure in the future.
What Types of Supply Chain Risks Exist?
The most common supply chain risks are the ones that are related to Mother Nature, government regulations, logistical problems, and supplier issues. There are many more risks supply chains face however. For instance, following the September 11, 2001 attacks on the World Trade Center, supply chains throughout the U.S. ground to a virtual standstill as all flights across the country were canceled. War, new government regulations, and countless other large and small disruptions to the supply chain cause major problems for businesses of all shapes and sizes.
How Can You Minimize Your Risks?
Despite the many different types of risks that exist, it’s necessary for businesses to work out methods and procedures that will minimize their risks. Fortunately, there are a few steps you can take with your business that will help minimize the impact that supply chain problems have on your business when they do come knocking on your front door.
1) Have a plan in place for supply chain failures. Create contingencies for various situations that may arise to cause disruptions to your supply chain.
2) Build a little “slack” into your supply chain. While budgets are tight, the benefits of adding a few extra links to your supply chain can really help cover the rough patches when they arrive. Consider investing in backup suppliers to help you overcome small glitches in your supply cycle.
3) Plan your budget with supply chain risks in mind. If they’re already built into your budget, they won’t deliver the same hard punch when the critical moment arrives. They also won’t have quite the same profound impact on your morale because you know you’ve planned ahead and the emergency isn’t as big as you initially thought.
4) Don’t ignore likely risks because you’re too busy planning for the unlikely risks. Chances are there won’t be another September 11 style attack anytime soon. If you spend all your time planning for that, you might forget that we’ve had 12 major hurricanes (Charley, Frances, Ivan, Jeanne, Katrina, Rita, Wilma, Ernesto, Gustav, Ike, Irene, and Sandy) amassing countless billions of dollars in damage and supply chain disruptions since September of 2011.
5) Invest in business insurance that mitigates these risks. The right business insurance plan, which includes supply chain coverage, will not prevent risks altogether but can help your business weather the risks that arise.
These steps won’t prevent every possible contingency but they can help limit the exposure of your business during those times when the supply chain fails.