While recessions are infrequent occurences, they’re cyclical and can result in a sudden massive surplus of inventory. With the threat of COVID-19 still looming in the air as businesses resume operations and the probability of an impending recession knocking on the door, it is imperative that steps are taken to recession-proof your supply chain.
The pandemic has led to extreme consequences, with many people being laid off indefinitely, and now restricting expenses to only essential items like groceries. Many supply chain distribution and management facilities have either completely stopped or slowed down their production lines to accommodate the changing economic climate.
The process of supply chain fulfillment in many sectors has also slowed down considerably due to heavy regulations and precautions. It is important to thoroughly understand every step of your production process so that you can work toward finding feasible solutions in the event of an economic crisis.
As one braces for the aftermath of the current economic situation, here are a few logistics management tips to help recession-proof your supply chain:
Systematic assessment of business practices
As the world treads on an uncharted territory in the post-COVID world, it is imperative to perform regular systematic and in-depth assessments of current business practices and partnerships. This can help identify inconsistencies, inefficiencies and any other potential issues that may be causing processes to slow down early on.
Even healthy and profitable economic climate demands routine business and supply chain efficiency assessments to ensure that you’re always prepared in the event of a recession.
Establishing proper communication at every level
Maintaining strong levels of communication at every level of the operation will prove to be extremely crucial. If you are someone who is at the helm of the operations at your company, then maintaining regular communication with people at every level, be it the frontline production workers to warehouse managers and beyond, will prove to be very important in checking inefficiencies and understanding the nuances of the situation.
Diversifying supply chain partnerships
Maintaining strong business partnerships and diversifying your professional relationships can help one drive better financial security during adversities by carefully assessing the capabilities of your supply chain to deliver goods and services, the demand of products and services during good and rough times, and the quality of accessories used by the supply chain logistics management team.
Doing so will not only help one fortify existing logistics management partnerships but also lead to establishing meaningful supply chain partnerships in the future.
Keeping contingency plans at hand
To survive a potential economic recession, financial and supply chain contingency plans will prove to be essential for any business aiming to survive the consequences.
The lack of a reliable contingency supply chain may force one to stop production on very short notice and absorb the immeasurable financial risk involved.
Securing a reliable contingency supply chain and logistics management partnership from the very beginning or before an economic downturn occurs provides an alternative channel of product fulfillment, retail distribution and manufacturing support when you might deem it the most necessary.
Rationalising the process through automation
Modern technology has facilitated streamlining of business practices and processes through automation. Automation allows you to quickly communicate the problem to the supplier so that they can immediately implement a feasible remedy, should you encounter any problem. By storing important information such as order details, fulfillment and delivery timelines, etc. on a secure cloud network, one can track each order on a real-time basis, identify potential problem areas that are slowing down the process, and make necessary adjustments automatically.
As the supply of the products and parts begins to outweigh the demand, recessions may also lead to production-based standstills. It can either take place over the course of a few weeks or months or worse, in the case of rapid business and government shutdowns due to rising public health concerns, it can be swift, leaving no time for one to prepare. It’s important for supply chain professionals to be as proactive and prepared as possible.
