Breaking down what happens during supply chain disruptions

These days, it seems impossible to go more than a few months without a supply chain disruption making headlines and causing issues. 

So far in 2024, among others, we’ve seen disruptions at the Panama and the Suez Canals, attacks on ships in the Red Sea and a collapse of Baltimore’s Francis Scott Key Bridge. 

These disruptions are often unpredictable and can create unforeseen costs – financial, time and resources – for suppliers. 

In today’s competitive, global supply chain, suppliers continue to face disruptions at various points in their supply chain, including challenges around sourcing products or materials, receiving products from overseas and shipping the products to end consumers. There’s a ton of pressure to ensure materials and inventory arrive at the right time and in the right place so that the brand can be paid and continue serving the needs of their trading partners and consumers.

Having a wide-reaching supply chain clearly delivers significant benefits; for example, your products and materials are sourced from anywhere you want, which gives you the opportunity to supply products that fit the bill of customer demand. Unfortunately, it also comes with disadvantages as well: so many factors are outside of your control.

One way to take a bit of control back is to better understand some of the factors that cause disruptions in order to put processes and tools in place to proactively address them. 

Procurement obstacles

Difficulty obtaining materials required for production can trickle down into the rest of your supply chain. Often, material procurement challenges stem from another company’s shortages, which is completely out of your control. You’re left to find another vendor or wait until the materials become available again, delaying your output either way.

Natural disasters

Storms, flooding, earthquakes and other natural disasters can affect the availability of raw materials as well as delay fulfillment and shipping of the items. In severe cases, warehouses and production sites can be destroyed or rendered unusable. When it comes to freight disruptions, road, port or airport closures can lead to extreme delays in fulfillment.

Staffing shortages

Between the high cost of labor and the declining number of people who make up the workforce, staffing shortages can affect almost every part of the supply chain. If a 3PL doesn’t have enough employees working, there can be delays in fulfillment. If a manufacturer doesn’t have enough workers, fewer items are produced. 

Also, it’s important to keep track of international staffing disruptions if you’re working on a global scale. Certain holidays require planning ahead so you can still complete transactions with trading partners who may be temporarily delayed or short-staffed.

International conflict and changes

International economic changes (like law changes, currency and tariff fluctuation and geopolitical tensions) can have a massive impact on the supply chain. These challenges can arise in any area of the supply chain, including increased difficulty in procuring raw materials, warehouse and storage shortages and skyrocketed costs to conduct business as usual. 

For example, a change in import or export cost could force a supplier to adopt a completely new partner and strategy for sourcing goods.

How to prepare for supply chain disruptions

Having insight into many of the factors that cause disruptions – and understanding the critical role visibility plays – suppliers can better understand what may come down the line (at any time) and be prepared for the worst-case scenario. 

First, make sure you have the ability to analyze sell-through data to make more informed decisions about item forecasting. With the ability to make data-driven decisions like these, suppliers can prevent stock outs and avoid other negative impacts of supply chain disruptions.

Second, closely track trends and understand how other parts of your supply chain function, so that you can proactively make decisions that will help you down the line. This way, you’re getting ahead of potential obstacles instead of reacting to them as they happen.

Third, diversify your vendors. If you know you need a certain quantity of a raw material, but the last time you placed the order there was a delay due to an ongoing natural disaster, it’s good to have a backup option – or build in plenty of extra time for the vendor.

Fourth, ensure complete communication. When you send and receive EDI documents with immediate, accessible and accurate data, it’s easier to keep an eye on how things are going at each point in the supply chain. 

Consider this fact: extreme weather has affected 99% of Americans since May. Not counting the many other factors that can cause supply chain disruptions, it’s clear that being prepared is a must for suppliers to remain competitive. While it’s hard to completely avoid the impact of some disruptions, it’s critical to know your risks and be as prepared as possible so that the next disruption is (hopefully) simply a blip on your business’s radar.