The COVID-19 pandemic brought to light a stark reality about current supply chains. As Nissan Motor Co.’s Chief Operating Officer Ashwani Gupta points out, “The just-in-time model is designed for supply-chain efficiencies and economies of scale. The repercussions of an unprecedented crisis like COVID highlight the fragility of our supply-chain model.”
The U.S. supply chain has struggled to adapt and restock pandemic-depleted inventories. There are industry wide shortages and a lag in how many manufacturers are responding.
Supply chains often represent a company’s highest costs. Identifying risks to your supply chain can help you respond rapidly and confidently to future supply chain disruptions. Common supply chain risk drivers involve disruptions, delays, inaccurate forecasting and procurement issues. Obviously, we all know now that a pandemic poses a major risk to supply chains, but other disruptions include natural disasters and labor disputes.
Raw material delays, lack of capacity at a supplier, poor quality, transportation capacity – these all create bottlenecks. Inaccurate forecasting, short product life cycles, one-time events or sales promotions, and seasonality can wreak havoc on getting products out the door. From the procurement side, beware of key components procured from a single source, industry wide shortages, and long-term versus short-term contracts.
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