Strategies to Mitigate Supply Chain Disruptions

 transportation management    

April 3, 2024By Will Quinn | Global Director of Strategy, Infor WMS

Welcome to our Infor blog series that focuses on strategies to help mitigate supply chain disruptions and provide greater supply chain resilience.  As manufacturing, distribution, and third-party logistics leaders, you know a well-managed supply chain plays a pivotal role in your organization’s success. However, disruptions, or unforeseen events interrupting the normal flow of goods and services, are inevitable. Sudden demand fluctuations associated with these supply chain challenges can cause significant impacts to your business, such as shipping and delivery delays, increased costs, and potential revenue loss, which all negatively affect your bottom line and customer experience.

This series will equip you with comprehensive insights to mitigate supply chain risk. We’ll delve into key strategies such as nearshoring, creating redundancy, investing in visibility software, and effective inventory management. Our goal is to help you navigate disruptions and maintain a resilient supply chain. So, let’s embark on this journey together toward a more robust and disruption-proof supply chain.

In recent years, we have witnessed a variety of disruptions affecting global supply chains. Here are some notable supply chain disruption  examples:

1. Baltimore  Bridge Collapse (March 2024):

Impact: Disrupted the flow of cars and auto parts, potentially causing shortages in these goods delivered through Baltimore.

Ripple Effects:

  • Increased shipping costs as cargo needs to be rerouted through other ports.
  • Delays in deliveries impact manufacturers and consumers relying on parts shipped through Baltimore.
  • Potential job losses in the Baltimore port industry.
Recovery: Rebuilding the bridge and restoring shipping capacity will take time, impacting supply chains for an extended period.

2. Geopolitical Conflicts and Security Concerns (Ongoing):

Impact: These conflicts can cause a supply chain crisis, which includes disruption of trade routes, increased insurance costs for shipping, and shortages of materials sourced from conflict zones.

Examples:

  • The Russia-Ukraine war has impacted supplies of wheat, metals, and energy.
  • Tensions in the South China Sea can disrupt shipping lanes vital for global trade.
  • Pirate of the Red Sea – attacks on ships, increased cargo theft and damage risk, leading to higher insurance costs and potential product shortages
Uncertainties: These conflicts can be unpredictable and long-lasting, making it difficult for businesses to plan and manage their supply chains effectively. 

3. Cyberattacks and Data Breaches (Ongoing): 

Impact: Disruptions to operations, data breaches exposing sensitive information, and potential financial losses.

Examples: Recent attacks, such as the NotPetya cyberattack (2017), SolarWinds attack (2020), and Colonial Pipeline ransomware attack (2021), showcase the vulnerabilities.

Mitigation: Strong cybersecurity measures, regular backups, and incident response plans are crucial to help avoid vulnerability in your supply chain.

4. Natural Disasters (Ongoing):

Impact: Damage to infrastructure, transportation disruptions, and power outages hindering production and distribution.

Examples: Events like the Japanese Earthquake and Tsunami (2011), Hurricanes Katrina (2005) & Harvey (2017), the California Wildfires (2018), and the Texas Freeze (2021) demonstrated the susceptibility of supply chains to natural disasters and the need for robust risk management strategies.

Preparation: Building supply chain resilience through risk assessments, supply chain diversification, and disaster recovery plans to help mitigate supply chain crises.

5. Labor Shortages and Strikes (Ongoing): 

Impact: Difficulty in staffing key positions, slowdowns in production and transportation, and potential for price increases.

Examples: Truck drivers, warehouse workers, and factory personnel shortages can cause bottlenecks.

Solutions: Improve wages and working conditions, automate where possible to increase productivity, and foster a skilled workforce through effective onboarding and training programs.

6. Suez Canal Blockage (March 2021): 

Impact: A six-day blockage of a vital shipping lane caused a massive ship traffic jam and delays in the delivery of goods worldwide.

Importance of Canal: A significant portion of global trade relies on this waterway.

Prevention Measures: Investing in infrastructure improvements and exploring alternative shipping routes can lessen future impacts.

7. Brexit (2020): 

Impact: New customs procedures and regulations caused delays and increased costs for businesses trading between the UK and EU.
 
Ongoing Challenges: Businesses are still adapting to the new trading environment.
 
Importance of Clear Regulations: Clear and predictable trade policies are essential for smooth supply chain operations.

8. COVID-19 Pandemic (2020—2023): 

Impact: Widespread lockdowns, factory closures, labor shortages, and transportation bottlenecks disrupted supply chains globally.

Affected Sectors: Electronics, automotive, consumer goods, and many others faced shortages and delays.

The New Normal: Building adaptable and resilient supply chains is crucial in a world with ongoing disruptions.

The COVID-19 pandemic was one of the most disruptive events in recent history. It caused widespread lockdowns, factory closures, labor shortages, and transportation bottlenecks, affecting supply chains across various sectors, including electronics, automotive, and consumer goods.   

Understanding these disruptions and their impacts is the first step toward developing effective mitigation strategies to build supply chain resilience. 

In upcoming blogs, we will delve deeper into these strategies and explore how to build a resilient supply chain capable of withstanding these disruptions. Topics will include Nearshoring as a Mitigation Strategy, Creating Redundancy in Your Supply Chain, Investing in Supply Chain Visibility Software, Effective Inventory Management, and more!

Stay tuned!

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