4 smart supply chain strategies for manufacturers

With manufacturers responsible for approximately 11% of the United States' gross domestic product and employing nearly 8% of the nation's workforce, many of the supply chain problems the country is encountering have fallen squarely on the industry's broad shoulders. Expansive though they may be, manufacturers are feeling the pressure. Indeed, of all the challenges they've encountered — from retention troubles to high operating costs — nearly 90% say the supply chain is their single largest struggle, according to a recent quarterly poll conducted by the National Association of Manufacturers.

While the supply chain will eventually course correct, it could be awhile before it returns to normal, given all the variables and global events that contributed to its disruption. Here are a few ways manufacturers can build a stronger, more resilient supply chain:

1. Partner with several suppliers
When you've maintained a stellar business relationship with an entity that has the materials you need for development — and they've always come through — using more than one supplier may seem superfluous. But if COVID-19 taught the business community anything, it's how quickly circumstances can change. In other words, nothing is a guarantee, even your most reliable suppliers.

Having a backup supplier can help guard against the unexpected. Ideally, it's best to partner with those companies that provide the most essential parts, fabrics or raw materials that you use during production. In other words, have standby suppliers for the materials you can't do without. 

2. Invest in technology that forecast outcomes
To a certain extent, manufacturing in all its forms is a guessing game; you can never be exactly sure what demand will be like for the goods you produce beyond past behavior. However, Internet of Things technology, automation, artificial intelligence and software that leverages those technologies — such as enterprise resource planning — provide more accurate insight on how much interest there will be for a given final product. These demand-prediction capabilities help to lower costs and improve efficiency as well as lead time so items are delivered to buyers or resellers when they're expected.

Business continuity planning and insurance can serve as stop-gap measures to existential supply chain challenges.

3. Guard against worst-case scenarios with financial instruments
Even when you've gone over all of the potential outcomes and how to diminish their risk, bad things can still happen that are entirely out of your control. But you may be able to soften the blow in terms of how supply chain disruption affects your company financially. Products like contingent business interruption insurance, cyber liability insurance for cyberattacks and other types of coverages can guard against serious hardships that threaten the survival of your operations.

4. Prioritize sustainability
Resources are so often finite, especially when your work processes are creating unnecessary waste. That's why it's important to weave sustainability into your supply chain management efforts wherever possible. Whether it's diminishing energy usage, deploying technologies that help you establish sustainable business practices or developing goals to make better use of natural resources, improved sustainability provides more predictability.