The once-staid topic of supply chain management is on everyone's minds these days, from supply chain managers to consumers, thanks to continuing pandemic-related supply chain disruptions, global economic and shipping challenges, and changes in consumer sentiment and purchasing patterns.

There’s never been a better time to learn how to identify supply chain risks, gain the agility needed to deal with various supply chain scenarios, and act quickly when an issue arises. Companies can take several steps to strengthen their ability to satisfy demand and achieve supply chain transformation.

To begin the process, it helps to take a page from the model adopted by the largest companies in the world. Many are considering stepping back from sourcing globally, in favor of the benefits of maintaining more localized supply chains, including avoidance of lengthy shipping delays and excess shipping costs.

Managing Suppliers

Even more importantly, companies need to develop a supply chain management strategy that makes supplier relations essential. By crafting strategic rather than transactional relationships with suppliers, they’re better able to find fixes when supply chain problems arise.

Businesses need to ask: Do we understand the suppliers below our direct Tier 1 level? Can we see where the significant risks are, and take the best actions? By mapping the supply chain, they can identify the origin of all products and services, making it easier to prepare contingencies. Options include implementing supply redundancies by splitting sole-source contracts between multiple suppliers, or even collaborating with competitors. 

For those looking to add new suppliers to the mix, it’s essential to keep in mind that price isn’t the sole factor in making a good selection. They also need to verify new supplier certifications, and quality and manufacturing standards.

Next, they’ll want to align a potential new supplier’s manufacturing and shipping locations with their production and storage needs. Do they need a multi-location supplier or a single warehouse? Balance the cost-effectiveness of using a more prominent supplier against being able to negotiate a better price from a smaller business with a single location, or stringing together multiple suppliers.

Most factories specialize in single product types or categories, so businesses will also want to look for a supplier’s expertise in their product type and target market. In the process, they can be assured that the new supplier is familiar with common quality and legal issues related to the product.

To determine whether a new supplier can produce enough of what’s needed, and how quickly it can respond to demand fluctuations, buyers will need to assess its commitments to other customers. They should also know whether it can provide the required staff, equipment, storage and materials.

Given the ongoing warehousing shortage in many geographic areas of the U.S., companies might even consider shared supply chains. This trend has grown over the past few years, as many now share warehouses and distribution centers to lower costs.

Using Data to Digitally Transform

Data is important for digital transformation, but it’s essential to know where it came from and how to use it. The right kinds of structured and unstructured data are the business’s lifeblood. In a super-connected world, not all customer data comes from the enterprise resource planning (ERP system). It comes from unstructured sources, like tweets, Instagrams and other social media posts.

Disparate systems can seamlessly exchange what’s referred to as structured data. And while these systems still need to improve at aggregating their respective data pools to ensure better analytics and decision-making, they will be, especially when one layers in artificial intelligence and machine learning for competitive advantage.

All the structured and unstructured data in the world, coupled with events like pandemics, tsunamis, nuclear meltdowns and even war can, directly and indirectly, disrupt supply chains, including critical business functions like determining points of manufacture and distribution as well as levels of inventory. The good news is that harnessing all available data with supply chain optimization software and relevant expertise can mitigate a company’s risk.

It's also essential to consider the value of data from documents such as purchase orders, shipping manifests and invoices, which can fuel analytics for insight into supply chains and significantly boost profits. For example, if a company routinely issues multiple purchase orders for shipments from one supplier, it might save shipping costs by bundling them into one shipment.

Supply chains are the lifeblood of businesses today. By keeping all of the components running as smoothly as possible, they can overcome changing consumer demand, transportation constraints and supply chain disruptions. It takes good supplier relationships, automated processes and a comprehensive analysis of data to run the best supply chain possible, and overcome any issues or disruptions that the business might face.

Sam Polakoff is chief executive officer and founder of BrillDog.