How to Build a Reliable Supply Chain in 2023

In the past decade, there’s been a slowdown in the supply chain business and it has now encouraged companies to be more careful about their supply chain management.

Rather than making predictions on what might happen like another pandemic, natural disaster, or even war, it’s best to implement strategies on how you can build up a reliable supply chain this year. After all, more than 50% of businesses claim that increased digitization and automation will force them to build a more reliable supply chain.

Well, let’s not waste any more time because in this article, we’ll dive deeper into learning more about how we can build a reliable supply chain this year.

Top 3 Challenges businesses face in the supply chain

Before we dive deeper and talk about building a reliable supply chain, let’s take a close look at some challenges you are facing and how you can overcome them.

1. Labor shortage

Since the beginning of the COVID-19 pandemic, there’s been a huge labor shortage in the job market. These shortages come for many reasons, but burnout at the workplace seems to be one of the primary reasons for it.

After the pandemic, trying to avoid burnout has become quite a challenge and it’s making things difficult for businesses. However, many businesses are offering their employees flexibility, by providing them with growth opportunities, increasing workplace safety, opening communication with workers, and more.

2. Increased online shopping

An increase in online shopping directly impacts supply chain challenges. Many people are not only purchasing goods but also groceries, cars, and other products of their preferences. Trying to meet this increased demand will also present a new challenge for the work environment.

You may ask why? Well, it’s because you need to meet increasing demands and this means that inventory space is expanding. Did you know that more than two billion people shop online now? It’s better to be prepared than to be sorry.

3. Increase the use of space

As demand continues to grow, you might also be facing inventory issues. Therefore, you need to optimize your space usage. Therefore, it’s highly important to work on your storage capacity to entirely avoid excess inventory and maintain all supply needs.

Additionally, let’s not forget about workplace safety. Increasing your storage space does not mean reducing workplace safety, so this is something to watch out for as well.

6 Tips to Follow for Building a Reliable Supply Chain

Now that you know about the challenges you are facing, you can follow these tips for building a reliable supply chain.

1. Encourage flexibility

Wish for the best, but always plan for the worst. Your plans might be on holding extra inventory, working with multiple suppliers, or even hiring more workers. Before you make a plan, always pay attention to the costs behind the plan.

Go with simple projects and not those that will result in high costs. Moreover, if any of these plans do interfere with your efficiency, it’s best to remove them altogether.

2. Truck driver insurance

If you are dealing with inventory, of course, you are going to deal with truck drivers too. In fact, the truck driver shortage has encouraged recent supply chain chaos. Even more, to say, you have to be extremely careful because in Western countries, you’ll end up paying hefty fines if the state catches you with truck drivers without insurance. 

As a driver is paid for driving a truck, they need to have insurance for it. You never know what can happen on the road and let’s face it, it will affect your supply chain reliability too. In short, truck driving insurance protects you and your customers from any potential damages. 

Let’s say an accident occurred and your customer's freight is damaged, in this case, your insurance policy will cover the costs. If we put it in a scenario where you didn’t have insurance, you’d need to pay for medical care either for you or someone else. 

Truck driver insurance from CoverWallet recommends that you protect your truck drivers with the following insurance methods: 

• General liability insurance: Protects all truck drivers against third-party bodily injuries and any property damage.
• Commercial auto insurance: Insurance that covers all of your trucks and vehicles. These costs are associated with any collisions, vandalism and damages due to natural disasters.
• Cargo insurance: Protects drivers against any cargo losses or damages done to them. This type of insurance plays a big role in building a reliable supply chain.
• Bobtail insurance: Applies if you were in an accident and caused any property damages. It pays for all medical and legal costs.
• Non-trucking liability insurance: This type of insurance isn’t widely used, but should be. It occurs for insurance coverage when a driver uses the firm's trucks outside of working hours, aka, for personal use.
• Comprehensive coverage: Covers all truck damage that occurs either because of theft, vandalism, and many other case scenarios.

There are many different types of trucking insurance, but it’s important to find the one that best suits your business capabilities and increases your supply chain reliability.

3. Hire new suppliers

It’s never a bad idea to have a backup plan and in this case, it includes hiring backup suppliers that can deliver either finished products or raw materials. Any business shouldn’t be dependent on a limited number of suppliers because they might face lots of consequences if results aren’t delivered on time.

Having backup suppliers can lead to increased competition, much better payment terms, finished goods, and pricing levels.

4. Leverage your data

Leveraging data that is produced in all supply chain stages allows you to identify disruptions, and optimize logistics, and with the help of digitalization, you can also reduce waste. The higher your digitalization level is, the more data you can collect and improve supply chain reliability.

By analyzing data, you can look at demand levels and review any disruptions, such as natural disasters. Also, the data can be used for future planning, seeing how energy can more effectively be used and promote a more environment-friendly world.

By having data ready, you can quickly address disruptions and allow your company to quickly make decisions on further steps. Analyzing supply chain data allows you to be better prepared for future predictions and balance out supply and demand levels.

After all, you need to always stay updated with future trends such as the amount of demand you’ll have, exchange rates, and many other metrics that relate to your supply chain management.

The good thing is that data allows you to make better decisions in difficult times and let’s face it, that is more important than you may think.

5. Improve your product’s movement

Product movement is important because it allows you to get rid of excess inventory. Having excessive inventory is a huge expense problem you can encounter and it can impact your supply chain even more than you think.

Therefore, it’s always important to optimize your storage space as we mentioned before. You can do so in the following ways:

• Increase your use of vertical space
• Create a clear stock routine and expectations for maximizing your stock-keeping unit (SKU) throughput
• Choose the proper storage mediums

After you implement these practices, you and your team can focus on many other challenges the business is facing. These practices not only help with order fulfillment but reduce expenses on excessive inventory and product returns.

6. Don’t forget to invest in partnerships

Working with the right suppliers and business partners is the key to building a reliable supply chain. Working together with other partners will help you achieve your supply chain goals much faster than doing so on your own. The more connected you are, the higher your supply chain reliability will be.

Working together not only promotes an environment-friendly world but also improves sustainability and transparency. Therefore, it’s a win-win situation for you and your partners.

Heading towards a reliable supply chain in 2023

Let’s face it, the world’s economy is not at the most stable point it has been in the past year, so now it’s the time to build a reliable supply chain. Prioritizing supply chain reliability is what helps a company skyrocket its growth.

After all, we did mention that there are plenty of ways you can make quick decisions even if some external factor does interfere with your supply chain management. By taking these steps into action, you’re preparing your organization for the worst and are ready to quickly provide solutions for any problem that may arise.