Supply Chain Data Cleanse: Clean Dirty ERP Data Safely
A lot of the major supply chain disruptions that happen, generally originate from far upstream. In fact, they often begin so far upstream that retailers don't have direct contact with the actual suppliers. It could be your producer's supplier's supplier who gets their plastic resin from China, which is now seeing a trade holdup. Since they can't import from China right now, no other partners can do any of the work in the following tiers of the chain.
This is why we need to look at the supply chain comprehensively to see where risks and disruptions are most likely to occur.In this blog post, we'll explore strategies to mitigate disruptions, manage risk, and build a more resilient supply chain.
If you've also had stressors on your supply chain, you're certainly not alone. The majority of organizations have run into serious disruptions. For some businesses, these disruptions could mean major revenue loss until they leverage Redwood's Modern 4PL approach to help them integrate the best solutions to resolve the issue.
What can you do to mitigate disruptions, manage risk, and have a more resilient supply chain?
What to do right now?
Unfortunately, if you're stuck in a hold up now, it's not likely you'll see overnight changes. The best thing you can do is create a risk framework to proactively minimize disruptions in the future. This may also allow you to create guidelines that can help you address current potential concerns with a level-head and clear objective. It might take some time to implement but now is better than never to implement.
Understand Potential Risks
You want to build a risk management framework that incorporates key risk triggers. Addressing risks is critical to ensuring the health of your supply chain's upstream and downstream.
How to best understand the potential risks your business faces:
- Collect internal data on all disruptions. Any time you run into delays in production, record it (ideally with an artificial intelligence system) so you can utilize it for predictive analysis of future risks.
- Use external data from industry models. Consider the risks that other partners or industry players have run into.
- Read academic studies about risk factors in your industry or region.
- Don't neglect less common risk factors, like a global pandemic, a trade war, or national disasters.
- Work with an agency that specializes in risk assessment and management.
- Use technology to perform root cause analysis and scenario modeling to evaluate all risks.
Create a Contingency Plan in the Event of Supply Chain Disruptions
Once you've identified the most prevalent supply chain risks, you'll want to create a plan to prevent and address these disruptions. We call this a "resiliency plan" or "disaster recovery plan." Consider how you'll respond to key triggers and establish guidelines for addressing problems.
Resiliency plans are especially important for international and global trade. It's hard to control for all the external factors—from tariff changes to a hurricane slowing down ocean shipments. You want to create a highly inclusive plan that addresses every possible risk.
Ensure Partners Have Comprehensive Risk Management Programs
Work with your supply chain partners—both upstream and downstream—to create similar risk management programs. Discuss how your organizations plan to work together to handle certain risks and make sure they're on board with your risk management ideas. All partners need to agree on a plan in order for it to work.
If a partner isn't willing to consider risk management strategies, they likely won't be reliable in a crisis. You might want to consider working with other partners. A risk management plan demonstrates a strong, healthy company.
Implement Predictive Artificial Intelligence
Artificial intelligence and machine-learning software can analyze all the internal and external data to create risk management strategies. It will also predict risks, create initiation triggers, and offer real-time recommendations for resiliency options. AI is an effective way to address potential risks before they come to fruition.
Redwood's Modern 4PL approach provides access to advanced technologies that can assist your supply chain from start to finish, including using AI to predict your business's needs. Check out our supply chain solutions that have worked within these case studies.
Learn how AI in supply chain management is transforming logistics.
Source From Multiple Partners
Diversifying your portfolio is one of the best risk management methods. You don't want to put all your eggs in one basket. If that basket drops, you're out of eggs entirely. You want to at least have a 75-25 split, where a minimum of 25% of your goods or material come from another source other than your primary. If possible, two or three sources at minimum for your product array can ensure your entire business doesn't shut down in the case of a disruption.
You may also want to talk to your primary partners to see if they have a source split. If your partners only source materials from one area or only have one delivery option, you could end up with holdups as well.
Naturally, more partners in your supply network generally requires greater logistical cooperation, though. Consult with Redwood's team for a custom Modern 4PL solution to streamline your network, no matter how many partners you have.
Map Your Partners' Sites
Create a map of where your supply chain's warehouses, distribution, manufacturing, and storage sites are. Make sure they're not all in the same region, like all in the same foreign country. This ensures that if that country were to enter into a trade war with the U.S.A. or hit by a natural disaster, your business wouldn't be entirely dependent on that region's goods. Like sourcing from multiple partners, you also want to source from multiple geographic areas.
Utilize Blockchain Technology
Blockchain connects all partners along the supply chain with cloud-based data. This creates a high level of transparency, so you can monitor and communicate with all partners 24/7. If you want to get ahead of disruptions, blockchain technology can help you see risks and errors ahead of time. The more data you have access to, the lower the risk. Learn about blockchain technology in supply chain and how it creates new opportunities.
Get Insurance
You want to make sure your business has enough commercial insurance to cover profits lost from any sort of disruptive event. This protects your business in the case of significant incidents that cause businesses to halt—like a pandemic.
Work with an insurance agent to make sure you have enough loss of income coverage on your business's policy.
Final Thoughts
Business continuity is business strength. The goal is to maintain a resolute supply chain, no matter what external factors may try to impact your logistics.
Our goal at Redwood is to deliver custom supply chain solutions for your business. We can help you create a proactive risk management plan, so you can continue doing business no matter the state of the world. Contact us today so we can help you!
FAQs
What should you do first when supply chain disruptions hit?
The first step is to build a risk framework so you can respond with a clear plan instead of reacting in the moment. That framework should capture disruption history, define key risk triggers, and give your team a consistent way to evaluate current and future issues. If you are already in a disruption, the goal is to stabilize decisions now and reduce the chance of repeat problems later.
How do you create a supply chain risk management framework?
A supply chain risk management framework should combine internal disruption data, external industry data, academic research, and scenario modeling. It should also account for less common events such as pandemics, trade wars, and natural disasters. Using technology and, where appropriate, a specialized risk management partner helps turn that information into practical response rules.
Why is it important to have a contingency plan for supply chain disruptions?
A contingency plan matters because it tells you how to respond when disruption triggers occur, especially when external factors are outside your control. In global trade, that can include tariff changes, hurricanes, or pandemic-related shutdowns. A resiliency plan or disaster recovery plan gives your organization a defined playbook for keeping operations moving as conditions change.
How can supply chain partners help reduce disruption risk?
Supply chain partners reduce risk when they use similar risk management programs and agree on how they will respond to disruptions together. That alignment matters upstream and downstream, because a plan only works if every partner is willing to follow it. If a partner refuses to consider risk strategies, they may be unreliable during a crisis.
How does predictive AI help with supply chain disruptions?
Predictive AI helps by analyzing internal and external data to identify risk patterns, set initiation triggers, and recommend resiliency actions in real time. It can also support root cause analysis and scenario modeling so teams can act before a problem becomes a shutdown. In practice, AI turns disruption data into earlier, more informed decisions.
Why should companies source from multiple suppliers during supply chain disruptions?
Multiple sourcing lowers the chance that one failure stops your entire operation. A practical rule in the article is to avoid putting all your eggs in one basket and to aim for at least a 75-25 split, where at least 25% of goods or materials come from another source. Two or three sources can provide a meaningful backup if one supplier is disrupted.
How do you map supply chain sites to reduce disruption risk?
Mapping supply chain sites means identifying where warehouses, distribution centers, manufacturing facilities, and storage locations are concentrated. The key is to avoid overdependence on one region or one country, because a trade war or natural disaster can create a broad outage. Geographic diversification helps keep the supply chain from relying on a single point of failure.
Tags:
