5 Ways To Mitigate The Impact of Ecommerce Supply Chain Disruptions

Increasing Deliveries

Ecommerce is seeing continuous and significant growth. Thanks to factors like conveniently-quick payment options, increasingly-fast deliveries, and of course, COVID-19, more people are shopping online than ever before.

Statista estimates that consumers worldwide spent a massive $21 trillion on online retail in 2021. This figure is expected to rise 56% by 2026.

Rising demand for online shopping naturally comes with increased competition. Ecommerce stores are popping up all over the internet as more businesses move online to get a slice of the pie.

Whether they are preparing for the biggest online sales days or identifying weaknesses in their supply chains, businesses need to be extra diligent and consistent. This is vital to ensure they meet their customers’ needs and demands.

Part of this is making sure that customers receive their orders within a reasonable time frame. Hence, ecommerce supply chain disruptions need to be mitigated.

What are Supply Chain Disruptions?

An efficient supply chain counts on many factors running smoothly. One hiccup in the chain can impact many other seemingly unrelated steps.

Think of your supply chain as a doctor’s office. If one appointment runs five minutes over in the morning, then every subsequent appointment will lag behind too unless another patient’s appointment is cut short to make up for those lost five minutes.

When there are supply chain disruptions, all the pit stops down the line suffer delays and disruptions as well. They will need to pick up the slack from previous stages to make up for the lost time. Or, of course, the shipment will be late.

As an ecommerce store owner, your job is to make things as efficient as possible. You may already use a product research tool to gauge market supply and demand. Various other tools such as email account management software will also make it simpler. But you want to get to the heart of the problem. Your customers will appreciate swift deliveries, open communication, and reliable service. These factors are key components of a good customer retention strategy.

Ensuring you maintain these from start to finish could be the difference between your customers sticking with you long-term and deciding to look elsewhere for their goods. Thus, funding one of your many competitors.

What Can Cause Supply Chain Disruptions?

It’s all very well and good knowing what supply chain disruptions are. But, to mitigate them, we need to understand the various factors that cause them.

Cyber threats and attacks: Increased technology use mean an increased risk of cyber threats. Even with robust cyber security measures in place, cyber attacks can and do occur. They can impact any stage of the supply chain, from manufacturing to the delivery of goods.

Nature’s disruptions: Even if your company is not based in an area prone to natural disasters, it is likely that some stage of the supply chain is. Whether these are storms halting flights, or tsunamis shutting down power plants, supply chain disruptions can be caused by natural disasters.

Transportation issues: Transportation can cause supply chain disruptions through heavy traffic on the roads, strikes, or harsh weather conditions. This is especially true in the winter months when snow and heavy rain are common in some parts of the country. Equally, the rising costs of transporting goods and raw materials are currently putting a strain on many businesses.

Costs: Fluctuating costs greatly impact different stages of the supply chain. The rising costs of resources, for example, will inevitably impact the cost of manufacturing. Companies may stop their work until the price falls or decide they need to lessen their load to make it financially viable.

Pandemic: More people turned to online shopping during the pandemic which greatly strained supply chains. The whole process was disrupted, and some chains even shut down altogether. Industries are still playing catch up and recovering from the devastation it caused.

Steps to Mitigate Supply Chain Disruptions

After the disaster that was COVID-19, businesses are identifying new ways to implement damage control. In fact, KPMG claims that 67% of businesses have goals to up their investment in detecting supply chain disruptions. These examples of goals to limit disruptions are widespread.

Will your business be subject to disruption?

If so, read on to learn how to manage supply chain issues effectively.

5 Ways to Mitigate Supply Chain Disruptions

1. Identify Vulnerabilities in Your Supply Chain

Your first step in mitigating supply chain disruptions is to audit your business’s supply chain. Identify vulnerabilities within it. Vulnerabilities can come from anywhere in the supply chain, from sourcing raw materials to shipping your products to customers.

For example, your manufacturers may only have one supply source for their raw materials. This may be considered high risk, particularly if the raw materials are sourced from areas prone to natural disasters like flooding.

Label each stage as “Low Risk”, “Medium Risk”, or “High Risk” based on what you learned about them. Once you have identified these, you can either strengthen the stage or plan what to do if there was a disruption.

2. Backup Your Inventory and Source Different Suppliers

Much like diversifying your investment portfolio, it can also help diversify your suppliers. Source different suppliers at each stage of the chain. Build relationships with each supplier, so you have multiple to call on when you need them.

If your ecommerce store is running a promotion, sending sales product examples to lots of customers will naturally increase your sales. You need to account for all situations and ensure a continuous stock supply.

It’s advantageous to build up your inventory to have an emergency supply ready and waiting should you need it. Prevent out-of-stock issues that may put customers off shopping with you. Keep a steady flow of inventory from your suppliers so that you are dependable.

3. Make Your Supply Chain Transparent

Supply chain transparency can be difficult. But, it will help you enormously when things go wrong. Part of building up a transparent supply chain is learning all you can about the stages in your chain. Only 6% of 623 companies worldwide could report full supply chain visibility.

For example, what contingency plans do your manufacturers have in place if they experience disruptions in sourcing their raw materials?

Use tools and software that give you real-time data. This can include inventory levels, logistics tracking, and changes in customer demand. One possible virtual receptionist feature, for example, is built-in analytics. This technology can show you trends in customer calls. Or check what tools your couriers have, for example, New Zealand Couriers’ Domestic Delivery and Network Dashboard are designed for our customers to see what is expected with collections and deliveries, enabling planning for business operations.

The more information you gather, the easier it will be to mitigate supply chain disruptions.

4. Reach Out to Customers

On the whole, customers understand and are sympathetic about supply chain issues. This is particularly true if they know you are working hard to rectify any problems. But you need to maintain an open level of communication. That means telling them promptly when you learn that their order will be delayed.

Apologise for any delays and explain the situation. You can also tell them briefly about what you are doing to solve any issues and how you plan on avoiding them in the future. You may even offer a small discount or freebie to make up for major disruptions.

This makes the customer feel more valued. They will appreciate the honesty. You will be less likely to experience significant backlash and complaints, which could damage your business’s reputation.

5. Have a ‘Supply Chain Disruptions Plan’ in Place

Benjamin Franklin famously said, “If you fail to plan, you are planning to fail”. These are not just inspiring words. They are bursting with truth, especially when it comes to matters of business.

The best thing you can do to mitigate supply chain disruptions is to plan ahead. Put together a detailed plan that you can follow when you need it. The plan should include:

• Steps you will take to prevent disruptions, such as building a backup inventory and identifying vulnerabilities.
• Steps you will take when issues arise, such as using your back-up suppliers and contacting your customers.
• How you will recover from the disruption and get things back to normal as quickly as possible. For example, supporting your workforce to maximise productivity.

Consider working with tools like voicemail-to-email services that send voicemails to email. These will help you maintain communication with your customers and suppliers.

Rounding Off

Although supply chain disruptions can be challenging, they don’t need to spell the end for your ecommerce store. If you put measures in place to prevent what you can, and you know what to do when things go wrong, you can minimise their negative impact on your ecommerce store.

Just remember to identify vulnerabilities, back up your inventory, source different suppliers, and communicate with customers. Also, ensure you optimise supply chain transparency and have a solid plan in place to mitigate disruptions.