Navigating Supply Chain Disruptions: 5 Key Tips for Success
- Peter Paquette
- Apr 1
- 8 min read
Navigating supply chain disruptions requires a blend of proactive planning, strong partnerships, and a willingness to embrace new technologies.
In the past couple of years, global supply chains have faced unprecedented disruptions. From the COVID-19 pandemic and extreme weather events to geopolitical tensions like the war in Ukraine, businesses have been forced to adapt and find solutions to keep their operations running quickly. So what are the key strategies companies can employ to navigate supply chain disruptions?
In this article, we're going to discuss:
Understanding the Supply Chain Disruption Landscape
Supply chain disruptions are not a new phenomenon. Over the past few decades, we've seen major disruptions caused by nuclear disasters, natural catastrophes, wars, and other unexpected events. However, the frequency and intensity of disruptions in the last few years have been unlike anything we've experienced before. The global pandemic, extreme weather patterns, and shipping delays have compounded the impact, creating ripple effects across the globe.
As businesses struggled to maintain steady operations, the spotlight on supply chains grew. Media, governments, and the general public have become more aware of the complexities of supply chains, leading to an understanding of phenomena like the bullwhip effect. Suddenly, supply chain managers found themselves at the center of discussions about how to sustain and recover business operations. These discussions highlighted the complexity of modern supply chains and emphasized the need for companies to have proactive strategies in place.
How Supply Chain Managers Respond to Disruptions
In the face of these disruptions, supply chain managers have had to focus on immediate solutions, often without the luxury of time to strategize for the future. The initial response has involved mitigating short-term risks and keeping the supply chain running smoothly. Some of the immediate actions taken include:
⚙️ Increasing Safety Stock
One of the simplest and most effective ways to buffer against disruptions is by increasing safety stock. This ensures that businesses have the materials or components needed to maintain production, even if supply lines are interrupted.
⚙️ Identifying Weak Links
Supply chain managers have honed in on the weakest links in their supply chains. For example, many companies reduced their reliance on multiple freight companies, opting instead for fewer, more reliable partners.
⚙️ Cross-Training Workers
During times of labour shortages, especially during the pandemic, many companies cross-trained their employees to ensure that key functions were always covered.
⚙️ Strengthening Supplier Relationships
Companies worked to build stronger relationships with their strategic partners to develop more flexible and reliable supply plans.
While these steps were essential for immediate recovery, they also revealed the underlying vulnerabilities within supply chains and pointed to the need for longer-term strategic shifts.
Pivoting the Supply Chain Mindset
As the dust began to settle, businesses started to realize that traditional models of supply chain management were no longer sufficient. One of the most significant shifts in thinking was the move away from “just-in-time” models to a more flexible, just-in-case approach. This pivot requires a change in mindset from all departments involved, including vendors and customers. It's no longer just about minimizing costs or optimizing efficiency; it’s about ensuring that there are contingencies in place to manage volatility. As a result, companies began reevaluating how they source materials, manage inventory, and structure their supply chains.
🔹 Onshoring and Reshoring
In the past, many companies relied on offshoring to reduce costs. However, disruptions in global trade and shipping have led many businesses to consider onshoring (bringing production closer to home) or reshoring (moving production back to the home country). These strategies can reduce reliance on distant suppliers and minimize the risk of shipping delays.
🔹 Strategic Partnerships
Successful supply chain management is no longer just about securing the best deal. Companies are shifting towards a "we win" mentality, where they collaborate with suppliers and customers to create mutually beneficial solutions. By building and maintaining strong partnerships, businesses can create a more resilient supply chain network that adapts to changing circumstances.
Embracing Technology for Transformation
As businesses grapple with these challenges, many are turning to technology to drive digital transformation and improve supply chain resilience. Key tools include:
Enterprise Resource Planning (ERP) Systems: An ERP system is foundational to effective supply chain management. It provides businesses with the ability to track resources, manage inventory, and respond to disruptions in real time. A properly implemented ERP system enables supply chain managers to integrate data across departments, optimize production schedules, and adjust to market fluctuations more efficiently.
Data-Driven Decision-Making: The importance of data cannot be overstated. Supply chain managers now have access to real-time data that enables them to make informed decisions quickly. By capturing and analyzing data across the entire supply chain—from suppliers to customers—businesses can gain better visibility and agility, allowing them to anticipate disruptions before they occur.
Digital Supply Chain Integration: In today’s interconnected world, companies must move beyond siloed departments. Supply chain managers need to integrate with various business functions like sales, marketing, operations, and finance to create a holistic view of the supply chain. This collaboration ensures that businesses can plan more effectively and adapt to shifting demand patterns.
5 Key Ways to Navigate Supply Chain Disruptions
While managing supply chain disruptions requires immediate actions, building resilience for the future involves a more proactive approach. Key strategies include:
1️⃣ Build and Maintain Strategic Relationships
Building and maintaining strategic partnerships is essential for fostering supply chain resilience. In the past, the goal was to secure the best price, the best delivery terms, and the highest quality. However, in today’s interconnected supply chain environment, partnerships with customers and suppliers are no longer just about maximizing individual profit or getting the best deal for our side but about creating long-lasting relationships that ensure the continuous flow of business for everyone involved.
This extensive network of relationships requires constant communication and collaboration, where information must be shared both within the company and externally. The key question for supply chain professionals becomes: How can we help our suppliers become better suppliers, ensuring that our mutual success is sustainable and resilient over the long term? This shift toward partnership is the foundation of a supply chain that can adapt, recover, and thrive amidst challenges.
2️⃣ Enable Digital Supply Chain Integration
Data is an intellectual asset for companies that can be used to guide strategy. Increased accuracy and speed of data capture is of the utmost importance and enabling digital supply chain integration is crucial. A robust digital infrastructure allows for seamless data flow across all departments, improving the overall visibility and responsiveness of the supply chain. Digital integration offers real-time access to key data, which can then be used to optimize operations and enable faster decision-making. This agility not only lets us respond to shifting demand but also helps us predict and address disruptions or market fluctuations before they escalate. This also ties into the next point.
3️⃣ Create a Robust Risk Management Plan
Effective risk management involves identifying potential threats to the supply chain and developing mitigation strategies. Tools like SWOT analysis can help companies assess their vulnerabilities and take proactive steps to manage risk. Proactive companies—constantly researching, gathering intelligence, and using real-time data—can mitigate risks more effectively. This approach provides visibility into the supply chain, enabling companies not only to foresee potential problems downstream but also to monitor the upstream activities that are often the source of disruptions.
Upstream disruptions can significantly impact the company, even though the downstream effects are what most companies focus on, as that’s where the customer impact is felt most directly. Part of your risk management strategy should also involve strong incident management and collaboration processes. One way to ensure effective risk management is to designate a specific group within the company that is empowered with the resources and authority to execute plans when necessary. This proactive approach, as opposed to reactive responses, is essential in maintaining continuity during disruptions.
4️⃣ Build Supply Chain Flexibility
Companies need to ensure they can scale operations up or down depending on demand and can respond effectively when disruptions occur. Buffer stock and robust vendor relationships are key components of building this resilience. As businesses learned in recent years, lean supply chains are not always the most resilient. By building in buffers—such as maintaining a slightly higher inventory of critical components—businesses can ensure continuity even in times of disruption. It’s essential to rationalize your inventory.
While increasing safety stock levels can provide short-term stability, it’s equally important to adjust and lower those levels to a more manageable, appropriate threshold based on real-time conditions and future projections. This dynamic approach allows you to stay responsive to market changes and manage risk more effectively. Rebalancing your supply chain network is also key to enhancing flexibility. By re-evaluating both global and local sources, you gain greater control over critical inputs, such as sole-source or single-source items, and the flow of components and materials—both inbound and outbound. This ability to pivot allows you to address disruptions faster and minimize delays.
Additionally, streamlining administrative processes, reducing errors, and fostering a culture of continuous improvement can further support flexibility. By implementing these changes, you’ll not only create more efficient operations but also reduce internal conflicts, enabling smoother cross-functional collaboration. A flexible supply chain isn’t just about reacting to disruptions—it's about proactively integrating flexible processes across departments to enhance overall agility and resilience.
5️⃣ Consider Sustainability
Sustainability is an increasingly important consideration for supply chain managers. What you need to ask yourself is, can you do in ten years what you're doing today? Sustainability isn’t just an environmental concern—it’s also about the long-term viability of the business. Businesses must think about the long-term impact of their supply chain decisions, considering environmental, social, and economic factors. It's about looking at what people need in their lives and being able to provide that to them. To look at the community that the company operates within and be part of that community. It also includes planning to conduct business with companies that have or operate in stable economies and that have similar foundations to the company culture that you have. Sustainable practices can not only help mitigate risks but also enhance a company’s reputation and long-term success.
Building a Strong Foundation With an ERP Solution
A modern, well-integrated ERP system such as Microsoft Dynamics 365 Business Central serves as the backbone of a resilient supply chain. For companies to thrive in today’s complex business environment, their ERP systems must be flexible, scalable, and capable of handling the increased demands of the supply chain.
A robust ERP system allows companies to:
Streamline operations and reduce manual errors.
Gain real-time visibility into inventory, shipments, and production schedules.
Collaborate more effectively across departments.
Make data-driven decisions that optimize the supply chain.
For businesses that have been using legacy ERP systems, it’s essential to evaluate whether these systems are still meeting the company’s needs. A thorough self-analysis can help determine if an ERP upgrade is necessary to stay competitive and resilient in the face of future disruptions.
Key Takeaways
Resilience is the ability to rebound from disruptions, and it is built through strategic planning, standardized processes, and flexibility. Navigating supply chain disruptions requires a blend of proactive planning, strong partnerships, and a willingness to embrace new technologies. By adopting strategies like reshoring, building strategic partnerships, and leveraging modern ERP systems, businesses can not only weather disruptions but also emerge stronger and more resilient in the face of future challenges.
Supply chain managers play a crucial role in transforming the way companies approach supply chain management. By prioritizing data, risk management, and resilience, businesses can ensure their supply chains are prepared for whatever disruptions the future may bring.
Digital Transformation with Kwixand Solutions
Here at Kwixand Solutions, we help businesses across Canada and the US digitally transform, setting you up for long-term success. As Dynamics 365 Partners, we bring over 50+ years of combined experience and our team of experts design creative solutions and strategies for your unique business needs.
About the Author: Peter Paquette, Supply Chain Solutions Engineer at Kwixand Solutions, is a Certified Supply Chain Professional (CSCP) with over 30 years of expertise in operations, production, and material planning. He is also certified in Planning and Inventory Management (CPIM) and as a Dynamics 365 Business Central Functional Consultant.
