Nothing can bring on a logistical headache quite like a sudden disruption in your supply chain. Whether you are a retailer that relies on consistent, predictable deliveries for your brick-and-mortar or online stores, or you are a manufacturer trying to maintain a complex network of relationships with suppliers and retailers, a sudden disruption can impact efficiency, availability, revenue, and have long-term impacts. Unfortunately, as we are seeing demonstrated relatively routinely, supply chain disruptions are inevitable even when the specific disruptions are predictable. 

To mitigate the risks of supply chain disruptions, you need the ability to make quick decisions, understand the impact of those decisions, and ensure that you can communicate effectively across your network of partnering retailers, suppliers, and/or manufacturers.

What Causes Supply Chain Disruptions?

There are many ways a supply chain can suddenly fail to run optimally. Understanding the different causes can help you create a strong mitigation plan that is built around short-term and long-term risk reduction strategies. 

Transportation Delays/Inclement Weather

In the past decade, we have all had a front-row seat to how fragile the international supply chain can be. While most supply chain disruptions will hopefully never be as debilitating as a global pandemic or a freighter blocking the Suez Canal, these are both examples of how important flexibility is for manufacturers and retailers. Anything that can temporarily close a port, manufacturing facility, or impact transportation can have lasting impacts on your supply chain. 

Price Volatility 

Of course, another risk that needs to be mitigated is sudden changes in costs. The global economy is constantly shifting and transforming, which can sometimes require you to consider switching from one freight forwarder to another or to different manufacturing facilities. Of course, fluctuations in fuel costs also have an impact on your supply chain, especially if you buy transportation via the spot market instead of through long-term contracts. Any major change in who you work with can completely disrupt your existing supply chain infrastructure. Fortunately, these changes can be more predictable and therefore easier for you to address. 

Changes in Consumer Demand

While not a traditional “disruption,” it cannot be overstated how changes in consumer spending behavior can impact your supply chain efficiency. Understanding your product lifecycle and overarching changes in how consumers interact with products can help prevent empty shelves or overstocks. Modern supply chain data platforms can integrate retail data with overarching consumer behavior insights to help both retailers and manufacturers respond to changes in consumer demand quicker than ever before, which is critical to minimizing the overall impact of supply chain disruptions. 

How To Create a Supply Chain Risk Mitigation Plan

Disruptions are equal parts inevitable and unpredictable. The combination of those two facts means that every manufacturer needs to consider a risk mitigation strategy. When a supply chain disruption crops up, you need clear visibility and a way to get a complete view of your supply chain so you can make data-backed decisions. 

What Data Do Manufacturers Need to Mitigate Risks?

When retailers share data with their manufacturers, it enables a much stronger collaboration. Of course, for manufacturers, this can be a blessing and a curse. Having visibility into what’s happening at various retail locations is valuable, but if you work with a large network of retailers, the disparate and siloed data can become overwhelming and almost impossible to leverage effectively. 

A supply chain data platform from an independent data collection company can help bring in retail data from multiple sources and ensure that it is displayed consistently. This means that as soon as there is news of a disruption, either globally or specifically for your supply chain, you can easily get a complete picture of where you stand and what levers you can pull to respond effectively to the disruption. 

How Can Retailer Data Be Used Effectively? 

Data is only valuable if it can be quickly turned into actionable insights. If a retailer sees a recurring dip in inventory for a product or category, they need an infrastructure that can use their data to identify the root cause of those out-of-stocks. Data platforms can answer questions like “Why are inventory levels dropping unexpectedly?” while also providing visibility so both the retailer and the manufacturer can proactively manage the supply chain. Data sharing through a platform improves visibility. What starts as an investigation into a singular trend builds into a much stronger, consistent collaboration because both groups can expect inventory shortages, plan for unforeseen shifts, and stay on the same page. 

Circana Case Study:

Insights support category and supply chain collaboration to address inventory shortages

The Importance of Tracking On-Shelf Availability

Visibility of in-stock rate performance across not only categories but down to the item level can completely transform your ability to mitigate the risks of supply chain disruptions. With the right tools, you can track on-shelf availability with near real-time inventory levels so that you can effectively see the whole picture when a sudden supply chain issue presents itself. Having the ability to immediately know your inventory levels across retailers can ensure that you can quickly build a plan and make the right decisions. 

How Can Retailers/Manufacturers Improve Supply Chain Visibility?

The relationship between retailers and their manufacturers is extremely symbiotic. In an ideal world, everyone is looking at the same data, understands the same goals, and has both visibility and quick access to actionable insights. For example, a manufacturer can track their in-stock rate performance across store/item combinations. With the right data platform, they can understand the relationship between their distribution center and the store inventory levels at a SKU level. This level of granularity makes it possible to activate supply chain strategies with increased specificity. As a manufacturer, having more levers you can pull thanks to accurate data means you can react to supply chain disruptions much more effectively. 

Not All Out-of-Stocks Are Equal

At a starting level, it can be easy to assume that the goal of every manufacturer and retailer is to prevent every single potential out-of-stock, especially during a supply chain disruption. But not all out-of-stocks are equal. A strong data platform can help manufacturers understand different levels of supply chain risks based on accurate and granular data. By using loyalty data, brands can understand where their products need to be refilled based on where products have high affinity. For example, if a supply chain disruption is short-term due to a temporary closure of a facility, your supply chain data platform can help you understand where the biggest impact would be felt if your product was out-of-stock. When there is an issue with your supply chain, you need to be able to see which retailers have sufficient inventory of your product, and which retailers will see out-of-stocks, and what the impact of those out-of-stocks would be. Instead of trying to refill every store that has low inventory, you can focus on moving products to stores that will have the largest impact on your revenue. 

Sharing Goals/Reporting Between Manufacturers and Retailers 

Of course, another great benefit of sharing data and collecting that data on an easy-to-use platform is that you can strengthen the relationship between your company and your suppliers, retailers, and other partners. When everyone can share the same goals, the same metrics, and even build new custom metrics, collaboration between companies becomes much stronger, leading to a synergistic benefit across the entire supply chain. 

Mitigate Supply Chain Risks with Circana’s Platform

At Circana, our supply chain data platform is combined with our deep industry knowledge and experience, transforming data into actionable insights. Our platform empowers manufacturers to collect retailer data and use it effectively, and it likewise allows retailers to communicate clearly with their manufacturers by sharing reports and ensuring there is clear visibility down to the item and store, daily. 

Frequently Asked Questions About Supply Chain Disruptions

What Is a Supply Chain Disruption? 

A supply chain disruption is any issue in a supply chain that impacts carriers, freight forwarders, manufacturers, suppliers, or retailers. Of course, this can be a global issue, including shutdown ports or facilities, but it can also be extremely specific to an individual manufacturer. Regardless of the cause, supply chain disruptions slow down deliveries, decrease efficiency, impact availability, and lead to out-of-stocks for retailers. 

What Is the Impact of Supply Chain Disruptions?

The impact of a supply chain disruption can vary greatly based on the nature of the disruption, but holistically, disruptions lead to lost revenue for everyone involved. Because of this, risk mitigation plans are a necessity. But more importantly, having access to data that allows your company to see the potential risk across your supply chain network can help empower you to make the right decisions quickly, tracking and refining as needed throughout the duration. Addressing supply chain disruptions is not about addressing each empty shelf equally, but by understanding which shelves, at which stores, and with which products, need to be fixed and which are less of an immediate priority. 

What Are the Biggest Causes of Supply Chain Disruptions? 

Supply chain disruptions have many causes that can happen at any point in the supply chain. For example, seasonal shopping like Black Friday and holiday shopping can lead to sudden empty shelves. In that case, demand forecasting and having a clear understanding of product lifecycles and consumer behavior can help ensure that manufacturers and retailers are ready for a shift in demand. On the other end, inclement weather, changes in the global economy, and facility closures can lead to a sudden lack of supply for manufacturers. In that case, you need to understand what your options are to source the materials you need, what your retailers’ existing inventories of your products are, and what to do with the product you have. 

How Does Consumer Behavior Impact Supply Chains? 

Consumer behavior impacts the supply chain at its final point. Surges in demand can have roots in anything from viral social media trends to consumers changing their shopping habits due to price sensitivity. Integrating consumer behavior insights with your supply chain data can help manufacturers and retailers see the complete picture and make the most accurate decisions.