Supply chain disruptions, first evident in the early days of the pandemic, are still making headlines daily around the globe. Many of us have been affected somehow, even if it was just searching for toilet paper in March of 2020! The building industry has seen wild price fluctuations and shortages of materials, including wood, steel, carpeting, lighting fixtures, and building technology. Lack of available warehouses and industrial space have driven rent rates higher. Stranded cargo at sea, congested ports and overwhelmed freight carriers are impacting global operations. Overall, the supply chain is highly vulnerable, more than we would like to think, and will impact business and the commercial real estate industry in the coming months.
We cannot predict disruptive events such as pandemics, weather, and political instability, so businesses need to build resilience tactics to help prevent and overcome significant issues with the supply chain. Chains are only as strong as their weakest link, as raw materials are sourced, refined, manufactured & assembled, and delivered to the end-user. A disruption in any of these steps can cause delays. As the global economy grows, supply chains have become highly complex, spanning many countries and multiple activities. Disruptions have caused schedule delays, rising costs, planning challenges, and unhappy customers. We may not foresee the next challenge or shortage, but we can learn to be more prepared.
In addition to re-shoring efforts and creating or utilizing manufacturers and suppliers closer to your company’s base operations, here are three trends that are helping businesses become more resilient and safeguard supply chains.
Artificial Intelligence and Analytics
For many sizable businesses, AI and business analytics are the future of efficient organizations. Because the internet provides people with immense amounts of options and research, to keep up with an increasingly competitive marketplace, maximize pricing, market share, and run 'lean operations,' companies should have visibility into the supply chain end to end. What does that mean? Invoices, contracts, and sales data might be in three different systems. There are cloud-based tech solutions that can help a business see all the finance, procurement, and operations components that will take the guesswork out of understanding risk exposure.1
Identifying the Vulnerabilities
Businesses can no longer rely on single sources for operations. It is critical to have a backup plan so that bottlenecks in the supply chain don't stall operations for weeks or months. Managers should be asking: What is the risk for this source? Are there alternate sources for this material? What are the financial impacts? Are there alternate materials or products? Creating a "plan B" (and even a plan C and D) will create strategic fallbacks when supply chains inevitably run into issues beyond our control. A big part of resilience is planning.2
Over-Communicating is Better Than Under-Communicating
Surprises are not good in the supply chain. Communicating with both suppliers and customers can help the flow of information to prevent major surprises and to make informed, strategic decisions. Communicate and maintain relationships with suppliers to stay up to date on upcoming or forecasted issues, trends in the business, and planning scenarios. Similarly, keep relationships with customers/clients to forecast demand and understand their needs as well. The more you communicate, the more information you have, and the lower the chances of being blindsided by a supply chain problem.3
We may not anticipate the next shortage or delay, but utilizing technology, planning, and communications will help build our business resilience to weather the effects of supply chain issues in the coming year.
1. McKinsey & Company - Building resilience through procurement analytics
2. Fictiv - 4 Essential Tactics for Supply Chain Risk Management
3. CoverWallet - 7 Tips For Small Business Supply Chain Management During a Rapid Growth Phase
Virginia Weida is a Certified Interior Designer, Certified Facility Manager, LEED and WELL Certified Professional with experience in all facets of commercial workplace design. As a WBE Certified Women Business Enterprise design consultant, Weida can assist a company relocating or renovating their workplace with all design phases, working as a team member on their behalf. Weida has experience with small and large corporations, as well as experience working with property managers and real estate brokers.
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