We have seen a flurry of articles exploring whether business people might soon find that their supply chain is under threat; in turn, this could threaten to scupper their entire business.
The business environment is becoming less benign
Many of these anxieties stem from worries about a trade war and the increasingly unfriendly words being exchanged between the US and China on the subject. Even without a full-blown trade war, trade restrictions could interrupt the supply chains that many businesses rely on. Industry Week recently described a scenario where trade relations are less stable, inflation is going up, earnings are being hit, and cost-cutting is no longer having enough effect on the bottom line.
Watch for warning signs in your supply chain
It is not just global developments that can adversely affect a supply chain, as serious problems can also arise locally. There are several warning signs that should not be ignored, as they may be indicators of a future supply chain breakdown.
An obvious sign is when a previously reliable supplier seems to suddenly start having quality control problems. These can be the result of issues elsewhere in the chain or in their business environment that are impacting them and that they can’t control. ‘Sub-tier’ suppliers are what used to be called subcontractors. If your direct supplier doesn’t understand how to measure and manage risk amongst these, your supplier could be vulnerable to sudden failure.
Supply chains are complex and many tiered
Take a high-tech product – let’s use a metal bonding adhesive such as http://www.ct1ltd.com/product-applications/metal-to-metal-adhesive/ as an example. It may seem to be a reasonably simple process to manufacture it; however, by the time you have brought together the materials and the delivery mechanism, designed the packaging, moved it from the factory to the warehouse and finally delivered it to the retail hub, you have built up a complex chain of suppliers. Any of these could be using their own sub-tier suppliers.
The last thing you want is a key supplier failing. Your business will suffer disruption and you will have to spend time finding another supplier. It pays to help them to be the best supplier to you that they can possibly be by encouraging them to be open and transparent if they have problems and helping them to find solutions.