Supply chain disruption is a business pain point that can impact a company in several ways, from empty shelves to production delays to missed shipping windows. The cause of the problem varies, but the impacts are similar: disrupted supply chains cost companies operationally, financially, and reputationally.
Globalization creates a complex interconnected supply network that makes it difficult to maintain continuity. As such, supply chain disruptions rarely affect just one region; the ripple effect from problems in any part of the world can be felt by businesses across a variety of industries.
The most common causes of supply chain disruption include natural disasters, transportation issues, and geopolitical factors. Earthquakes, hurricanes, floods, and blizzards can prevent deliveries from reaching their destination, or even shut down factories altogether. Natural disasters can also cause raw material shortages, causing production delays, changing product quality or price, and increasing consumer costs.
Other supply chain disruptions can stem from technological failures, cyberattacks, or changes in regulations or trade policies. For example, a food producer may need to alter its packaging or materials to comply with new regulations that increase environmental standards. Transportation problems like strikes and fuel shortages can cause delivery delays or limit the availability of certain goods.
While it’s impossible to eliminate all disruptions, there are a number of strategies that can help companies reduce their risk. For example, diversifying suppliers and building a network of backup routes provides flexibility to address disruptions quickly. Additionally, technology solutions that improve visibility and forecasting can help businesses respond to issues faster.