supply chain shortages

The ongoing pandemic drastically affected many businesses across the globe. Some have had hiccups in getting enough stock from their suppliers on time. In contrast, others have had a terrible drop in their sales levels due to the numerous lockdown policies implemented by the regulatory authorities in different countries.

Over the past couple of years, there has been a severe global supply chain disruption. Many small businesses could not continue with their operations due to this disruption. But many large organizations tried and succeeded in coming up with effective ways to deal with the supply chain shortages they incurred. And that’s what this post is about.

In this article, we will discuss how these businesses worldwide struggled to develop strategies to solve their supply chain shortage issues. But before we discuss those, let’s define what a supply chain is to better grasp this topic.

brand website of a company selling seasoning products that are a major part of the supply chain system in the food industry

Image taken from Strikingly user’s website

What is a Supply Chain?

A supply chain is part of an organization's operations management sector. It encapsulates the organization’s facilities and activities that bring about the production of a product or a service. The word ‘chain’ in the term indicates that it involves a series of steps leading up to the final product. And hence, ‘supply chain shortages‘ implies a break in that chain causing turmoil for the organization. A supply chain is sometimes also called a value chain because more and more is added to the product or service being prepared to be taken out into the world at each step of the process.

However, such an integral part of an organization inevitably comes without the risk of huge problems. That is why supply chain shortage issues are not uncommon, and managing supply chain shortages is an essential part of the day-to-day processes of any organization.

Supplier chains need the information to travel through them, both downstream and upstream. And when so many different steps are involved, supply chain shortages often occur simply due to distortion of information traveling through so many people before reaching its final destination.

But before you learn anything further about supply chain shortages and managing supply chain shortages, you should first be well informed on what exactly these shortages are. So keep reading further to find out!

What is a Supply Chain Shortage?

In the simplest terms, to define supply chain shortages, we say that they occur when the demand for a good or service in the market exceeds that of its current supply. There are often not one but several reasons behind the failure of organizations to effectively manage supply chain shortages. That is because supply chain shortages in itself occur for many reasons. A non-exhaustive list of such reasons is as follows:

  • Failure to adhere to customer service protocols
  • Mismanagement of costs
  • Inaccurate forecasting and risk management
  • Outsourcing crisis’ and untrustworthy partnerships
  • Low productivity of labor
  • Miscommunication along the supply chain
  • Natural disasters
  • Emergence of competing firms in the market

 ecommerce website of a company selling herbs that are a major part of the supply chain system for manufacturing tea

Image taken from Strikingly user’s website.

The above-mentioned potential reasons behind supply chain shortages are a good representation of what a supply chain shortage really is. It is the incompetence of any one or more parts of an organization’s team, having a domino effect of downfall on the rest of the organization due to the interdependent nature of a supply chain. Lack of constructive communication amongst the different parts of a supply chain is, therefore, synonymous with supply chain shortages, and one of the reasons for failure to manage supply chain shortages in any organization or business.

Even though sometimes complicated, it is not impossible to manage supply chain shortages.

The most critical factor in doing so is perhaps to always be one step ahead of the game, in a way that any supply chain shortage issues that arise do not come as a shock to you, and you already have a plan to fix the damage. Now let’s see some ways of managing supply chain shortages below.

How to Manage Supply Chain Shortages?

To increase the efficiency of your supply chain and lessen the risks of supply chain shortages, you must employ more than one method to manage the overall chain.

1. Focus on Probabilistic Forecasting

In contrast to the demand-driven forecasting method that was previously used, this forecasting method considers all possible outcomes of uncertain outcomes of the success or failure of a good or service in the market. Additionally, it gives you pretty accurate probabilities of each situation occurring to know how likely it is that you will have to deal with each type of uncertain outcome. This makes it easier to know which outcomes of supply chain shortages need more focus before they occur.

ecommerce website of a company selling coffee beans that are a major part of the supply chain system for a coffee business

Image taken from Strikingly user’s website

2. Pre-Purchasing

Suppose you sell a product with many components or services with many people involved. In that case, you should always identify the components with high lead times or high uncertainty potential for supply. These components are usually the ones to cause supply chain shortage issues. Then you need to pre-purchase these components making sure you do not incur any losses. For that, you will need time and effort to calculate the optimum amount of pre-purchases you make.

This way, the chances of supply chain shortages will be minimized. Even if miscommunication regarding the demand occurs, you will be able to adjust quicker than you would have otherwise.

3. Stress-testing

The best thing about running a business in today’s day and age is the wide variety of online tools and software that can efficiently generate answers and results regarding various things to help you better your services. S&OP or Sales and Operations Planning Softwares are the tools you can use to avoid supply chain shortages. These tools help to test your current demand and supply quantities in cases of sudden changes and the emergence of unexpected or unnoticed variables coming into play.

A different tactic than probabilistic forecasting that we discussed earlier but gives us a similar edge over the market and the potential blunders in our supply chain.

4.Demand Shaping

This tactic is a clever way to make your customers generate a demand that you already know you can handle, so that chances of supply chain shortages are minimized. Using marketing tools and appealing offers can drive your customers towards ‘wanting’ the products that cause less strain on your supply chain than the opposite.

Not only does this keep your customers happy because they feel that ultimately they are getting what they wanted all along, but it also makes sure you can provide them exactly that. It creates a win-win situation for the producers and the buyers without anyone noticing.

Showing a website promoting organic baby food using a short supply chain for the business

Image taken from Strikingly user’s website

A Bonus Tip

These were the 4 ways you can use to deal with your supply chain shortage issues. A bonus tip for you today is that it greatly helps if you have a record of all your inventory and pending orders within one online platform or system. This way, you will be better equipped to keep track of any supply chain shortages that you either currently have or are likely to incur in the foreseeable future.

These days, what makes it a lot easier for businesses to manage many areas of their operations online is using a website builder to create a professional website that showcases your company’s products or services and provides tools to conduct your marketing campaigns and order or inventory management.

Strikingly editor showcasing print-on-demand product items that tells a little bit about their supply chain

Image taken from Strikingly

If you build your corporate website on Strikingly, you will get access to our simple store feature, where you can keep a close track of all your orders, as well as on your stock or inventory levels. This, in turn, will help you estimate any supply chain shortages that you might expect soon. It will also help you keep your customers well informed about the situation so that you do not get too many customer complaints due to late deliveries or order cancellations.

To create a website on Strikingly, you simply need to register for a free account with us to get access to our tons of ready-to-use website templates. Your journey for a thriving business begins with us, as it has for many of our other users. We update the features of our platform regularly to provide you with a smooth and convenient experience of building, updating, and maintaining your brand website.

For more information on using our platform to create your website and integrate your marketing activities, you can look at our knowledge base, where we give answers to many of our other users’ queries. Our members are encouraged to answer each other’s questions and build an enriching experience and community for all.