Supply and demand pressures, unforeseeable environmental issues and internal factors can all affect a business’ supply chain, an article has said.
According to an article on the Business2Community website, our current “on-demand economy” in which each consumer “expects services and products” to arrive very quickly puts pressure on supply chains, while unpredictable demands from end-users can also be an issue for a supply chain. Businesses offering the fastest supply chains will thrive in this environment, and recording order trends and anticipating the busiest periods “should help reduce the strain during periods of heavy demand”.
The piece describes supply risks as “an external risk” that can potentially affect “any segment of the supply process”, for example, acquisition of parts of materials needed to create your product. Therefore, it is important to “always use reliable sources” and “trustworthy transport or couriers”. Reliable transportation is also crucial in delivering the product or service to the end-customers.
Another prominent external risk comes from environmental factors, as your company “can have no control” over changes in the climate and weather, as well as on a social and political level. These risks apply “to many other businesses using similar supply chains”, but “adaptations” can be set up to prepare for certain governmental and political risks which can be known about in advance.
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Natural disasters are less predictable or give little time for making changes, the article comments. It gives the example of the volcanic eruption in Iceland in 2010, which along with the national floods in Thailand and Malaysia disrupted “many supply chains by delaying deliveries and other aspects”. Meanwhile, political unrest such as the fighting in Ukraine affects many business supply chains, showing that a “back-up plan” to endure such problems is would “help alleviate the problem if one occurs”.
Internal supply chain risks also exist, such as loss of personnel, planned or unplanned, providing another instance where the supply chain must adapt “when known changes are made, with replacements adequately trained in the role”. Other internal issues include management switches and reporting structure changes, which will cause “overall” affects to your supply chain. In light of this, the article concludes, “when making such changes to the business the overall supply chain and effect upon it must be considered” so “unpredictable” risks can be avoided.