Business leaders today know that supply chain disruptions are here to stay. As one logistics manager from a West Virginia factory put it about the ongoing supply chain shortages caused by the pandemic, “No issue is ever solved these days, just managed. It’s an exercise in how flexible you can be in an inflexible world.”
Predicting the future is never easy, and many experts didn’t know how long shortages would last or what would come next. Some expected the shortage issues to continue for a while, while others predicted an excess of supplies would soon become a problem. While no one has a crystal ball, there are several steps electronic components distributors can take to better prepare for ongoing supply chain challenges.
Here are three essential tips for leaders in the industry to help navigate supply chain uncertainty and make informed decisions for their businesses.
1. Gather Information from a Variety of Sources
To make smart decisions about the supply chain, it’s important for leaders to stay updated on global news and events that can affect the flow of goods. But it’s not enough to just read the news—you also need to stay connected with industry peers and colleagues to gain a deeper understanding of what’s happening.
For instance, hearing about firsthand challenges from someone working in a factory in Taiwan can give you much more useful insight than just reading a news report. By regularly checking in with other leaders, whether they are partners, customers, suppliers, or even competitors, you can gather valuable information about what’s really going on in the market. This helps you make quick adjustments when things change.
Sometimes, you can learn a lot by listening to earnings calls from companies. For example, I learned a great deal about industry and economic trends just by listening to how companies were dealing with supply chain issues during these calls. Collaborating with others and sharing information can often lead to solutions that help everyone in the industry, just like the saying, “A rising tide lifts all boats.”
Frequent communication with your customers is also key to staying informed. For example, back in early 2021, many suppliers and manufacturers were trying to get rid of their extra inventory of electronic components. However, demand surged unexpectedly, especially from the automotive and computing industries. By keeping close contact with customers, my company was able to understand this sudden shift and react quickly, avoiding bigger problems.
2. Dive into Earnings Reports for More Visibility
Having a clear understanding of the financial health of major companies can give you a window into the state of the economy and supply chains. Companies’ earnings reports can reveal a lot about how global issues are impacting their operations.
For example, in 2021, Nike lowered its forecast for 2022 because the global supply chain disruptions were worse than expected. One of the major issues was factory shutdowns in Vietnam, which hurt production. Similarly, companies like Intel had to report lower-than-expected earnings due to a drop in PC demand. On the other hand, some countries eased their pandemic restrictions, meaning fewer factory shutdowns, but many companies that rely on countries with stricter restrictions still face challenges, such as export delays.
Leaders can use global supply chain tools, like Panjiva, which provides information on more than eight million companies and over a billion shipment records. These platforms can help you gather supply chain data quickly without taking up too much of your team’s time.
3. Embrace the Latest Digital Tools for Better Flexibility
Relying on outdated procurement methods—such as making deals over the phone or through emails and tracking them in spreadsheets—no longer works well in a fast-changing market. Technology now offers better tools for sourcing and purchasing, helping businesses stay competitive and flexible, especially during uncertain times.
For example, many supply chain leaders now use dual-sourcing strategies, where they rely on more than one supplier for key components. This way, if one supplier faces challenges, you have backup options. According to McKinsey, 81% of supply chain leaders adopted dual-sourcing strategies in 2022.
To manage this, you can turn to e-commerce marketplaces. These online platforms help you track price changes and inventory levels across various suppliers, making it easier to make informed purchasing decisions. These tools also allow suppliers with excess inventory to sell directly to the market, which helps clear out stock and ensures that manufacturers can find the parts they need.
E-commerce marketplaces can also break down geographic barriers, enabling you to connect with suppliers worldwide, which can be a major advantage during times of global disruption.
Conclusion: Strengthening Supply Chain Resilience
It’s clear that the challenges we faced during the pandemic are still impacting supply chains today. While the worst of the pandemic is over in most parts of the world, issues like natural disasters, geopolitical conflicts, and inflation continue to disrupt global supply chains. A recent report from Interos found that these disruptions cost companies an average of $182 million per year in lost revenue.
To cope with these ongoing challenges, business leaders need to build strong, flexible supply chains. This involves staying informed by gathering data from various sources, keeping up with earnings reports to spot trends, and embracing modern digital tools that offer flexibility and help manage unpredictable changes.
By following these strategies, leaders can better manage supply chain disruptions and ensure their companies remain resilient in the face of ongoing challenges.
