An interrupted supply chain like never before

November 15, 2021 | 4 minute read
Danny Wu
Product Marketing Manager, Oracle
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If you’re looking for uninterrupted gift giving this holiday season, forget it. If you plan to send gifts to your loved ones, you may be out of luck. The reason: supply chains are at a standstill. With the influx of shipments coming into California ports (which handle 40% of all cargo entering the United States) and the labor shortage due to the pandemic, ships have been stuck in the Pacific Ocean waiting to unload their cargo.

Many suppliers are stuck in the same mess as everyone else: they’re reliant on a clogged-up supply chain to restock their shelves. Whether you’re a manufacturer trying to procure raw materials for production or a retail company trying to stock up for the holidays, things aren’t looking good. Companies like Home Depot and Target are chartering their own ships to ensure they have enough stock to meet the increase in buying by American consumers. Renting a cargo ship is an extreme and expensive option that few companies have. For them, the answer is to find an alternative supplier or suffer the pain. JP Morgan’s CEO Jamie Dimon has said, “Keep in mind, the consumer’s buying other stuff. They can’t buy cars, they’re buying home improvement; they can’t travel internationally, they travel domestically. The spend level is very high.” Today’s supply chain disruptions are unprecedented, to say the least.

What can you do now? And what can you do for the future?

Diversify suppliers

While current supply chain problems will have to work themselves out, there are steps companies can take to prevent them from being in the same situation next year. Supplier diversification can increase flexibility, which helps you respond to changing market trends and customer demands. Having multiple suppliers means having more options. Rather than being dependent on a single source or region, a diverse supplier base breaks your reliance on a single source. It can also help you take advantage of better prices. However, consider geographic diversity; having a second Chinese supplier would not solve the situation if your second supplier depends on the same ports to load their goods. Diversification provides relief from regional risk. Instead of looking at another factory/manufacturer from Asia, consider suppliers located in other regions that may not be affected by the same economic circumstances. Finally, before selecting a new supplier, take the time in advance to pre-qualify to minimize company-specific risks such as financial problems, quality control, and ethical issues.

Optimize inventory

Many companies may be tempted to increase their inventory to offset the effects of supply chain disruptions. Referred to as safety buffer stock, extra inventory can help ensure your ability to reliably fill orders. Having enough inventory is crucial, but having too much can be expensive and risky. The more money you have tied up in inventory, the less you’ll have to cover operating expenses such as rent and payroll. Companies need to automate inventory management as much as possible to gain better visibility into demand and control materials, costs, and orchestration. Inventory management is not only about stocking enough items. It is about finding the right balance between cycle stock and the associated costs and risks of overstocking. Supply chain planning systems can provide visibility into demand patterns to help you stay ahead. The ability to clearly view your inventory across locations—by setting minimum and maximum reordering points for particular SKUs—helps ensure that you always have the right amount of stock to meet fluctuating customer demands without overspending.

Streamline logistics

Streamlining your company’s operations can improve efficiencies, reduce cost and increase your company’s growth. The ability to ship orders effectively and economically is integral to the success of the company, and efficient shipping can help the business become more sustainable. It’s important to consider how you can streamline logistics to keep everything running smoothly and on time. The talk of 2021 has been about how to manage transportation, global trade, and distribution, maximize perfect order fulfillment, and minimize risks and delays. It’s of utmost importance to know how to adapt to these changes. 

How can we help?

In times of global uncertainty and disruption, it’s important to not only look at what’s happening now but also the future. Companies who took the time to think about their global strategy and footprint in the past year learned to adapt to change. Oracle Cloud Supply Chain & Manufacturing can provide you with the tools and capabilities to grow and scale freely and independently. Oracle Cloud SCM connects your supply network business applications such as Supply Chain Planning, Inventory Management, Manufacturing, and Procurement in order to help streamline your business and outpace change. 

Take a quick tour of Oracle Inventory Management to see how it can help you optimize inventory by reducing costs and increasing cash flow.

Danny Wu

Product Marketing Manager, Oracle

Danny Wu is a product marketing manager focused on supply chain management. He most recently worked as part of the Oracle sales team in Boston and Los Angeles. Born in the United States, Danny was raised in Taipei, Taiwan and received his bachelor’s degree in economics and philosophy from Boston College and masters in marketing at University of Southern California.

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