Supply chain disruptions have become commonplace in a perfect storm of events. Fewer workers, overwhelmed warehouses, and the pandemic have contributed to the current issues. With over 30 years of experience, PLS Logistics Services has seen it all, and we are here to share what we know to help you navigate supply chain disruptions.
Supply Chain Disruptions: Contributing Factors
First, let’s discuss the main contributing factors disrupting the supply chain.
Impact of Natural Disasters
Although the ultimate impact of natural disasters is hard to predict, businesses can take a few simple steps to ensure preparedness and speedy recovery.
Warehouses are overwhelmed
Warehouses have become a critical middle link in the country’s supply chain. Many warehouses have over 99 percent occupancy.
Supply Chain Workforce is dwindling
Supply chain workers are leaving the industry to pursue other career choices or entering retirement.
Logistics managers must adjust to supply chain disruptions to their best abilities. So, how can you plan for these?
Predict the Unpredictable
Effective logistics management will set you apart during disruptions as supply chain management challenges pile up. Your company can gain more trust from clients and attract new clients after a poor experience with your competitor. Logistics managers have a massive opportunity if they can emerge victorious from the supply chain issues. As supply chain issues become increasingly prevalent, we have outlined strategies to stay on top of the competition.
Diversify Suppliers
Reliable suppliers can become less predictable in the short term. A supplier may suddenly become unavailable due to excessive demand or take longer to provide cargo. Logistics managers should look for nearby suppliers and spread their pool. You can quickly pivot to other suppliers if you get hampered by supply chain issues.
Not every supplier is reliable. Some suppliers won’t have the right resources for your company, but suppliers won’t tell you if that’s the case. They want new business and will present themselves in the best way possible. Do your homework on each supplier to make sure you work with great partners.
Suppliers will convince you they’re the best, but only customers tell the truth. Ask each supplier for references and contact them. A supplier’s customers can provide the most accurate insights and help narrow down your list. You can ask these same customers for supplier recommendations. It’s common for logistics managers to work with several suppliers.
It’s tempting to cut costs by selecting the most affordable suppliers. You may impress your boss in the short term with higher profits, but supply chain issues can erode the initial goodwill. Some suppliers charge less than competitors because they don’t have as many capabilities or don’t deliver on time. Cutting corners can inspire customers to look for competitors. Brand loyalty has less sway in this economy, and mistakes can hurt your customer list. You don’t want to save money today if it means more headaches and losing customers tomorrow.
While looking for new suppliers, you should build and strengthen relationships with your current supplier base. Regularly communicating with them will build trust and confidence. In addition, a shared understanding of goals and business capabilities on both sides will reduce confusion and disagreements.
Refine Your TMS System
You can’t make meaningful, calculated improvements unless you track your data. Looking at data helps you identify bottlenecks. Logistics managers can use a TMS system to gain more insights and simplify their supply chain management, but some systems get outdated. Third-party tools and monitoring services provide additional insights, but it may be time to get a new TMS system if these costs add up. New systems come with advanced features that let you skip the costs of third-party tools and modules.
A TMS helps you adjust to supply chain issues. You can readily communicate with drivers and provide updated information to help with their deliveries. The insights from a TMS system can help you lower costs, and if you upgrade your TMS system, you’ll save even more.
A TMS will also handle payments. Payment issues can delay a delivery. The current supply chain tests everyone’s patience, and any additional delay can lead to frustration. The right technology will avert this scenario and indicate optimized routes. Your partners should have the same commitment to technology. Modern tech can save time and money, two vital resources experiencing significant pressure in the current market.
Driver Shortage
Every little bit of savings from a TMS system helps, especially when considering the labor shortage. It takes a special breed to drive a truck and disappear from their families for several weeks. Fewer people want to hop behind the wheel, and it’s also harder to retain talent. More drivers can clear out warehouse space sooner and help you accept more freight. The shortage makes this objective more difficult, but solutions exist.
Some companies are reaching out to retired drivers and inviting them to return to the workforce. However, inflation, supply chain issues, and other factors have increased the cost of living. Some drivers need the money, while others may get behind the wheel at the right price. Reaching out to retired drivers may be a short-term solution, but it gives you time to formulate a long-term strategy.
You can also leave this responsibility to your 3PL provider. They can build a carrier network on your behalf. Hiring your own drivers in-house might have been your best option in the past. However, drivers have more options in the current market. Competitors looking to expand operations may approach your drivers with more attractive offers. As logistics managers want to keep their drivers, not everyone can pay up. Using a 3PL provider with an extensive carrier network can drastically reduce your costs.
Managing Inflation and Supply Chain Disruptions
Inflation and supply chain issues are both here to stay. Moreover, neither seems transitory with the likelihood of higher inflation in the future.
It’s common for businesses to pass price changes onto consumers. The world economy relies on gas, and the resource’s 38 percent year-over-year jump explains why the prices of goods and services have inflated over the past year. You can raise prices on your freight deliveries to minimize losses and afford salary increases. You might lose some clients by raising your prices, but you shouldn’t take an order if you end up with a net loss. Losing clients gives you more resources to serve existing clients and reach out to prospects. Determine what profit margin is acceptable for your company and only accept work that produces your target profit margin.
For more help navigating supply chain disruptions, contact us today!
