Reviewing your supply chain risk has become one of the most important tasks to tackle in recent times due to the pandemic.

Supply chain disturbances have been a common occurrence lately due to the shutdown of borders and lockdowns. This has left many businesses vulnerable and has caused a large loss of revenue for those that were not prepared.

Preparation for supply chain disruptions is a must and if these events have taught us anything, it is that things can change in a blink of an eye.

There are always lessons to be learnt in times of hardship, so here are our tips you can use to diversify your risks with your suppliers.

1. Build up a portfolio

Single sourcing is a risky deal. Things can change rapidly, especially in this climate we are finding ourselves in. Having multiple sourcing options diversifies your risk and helps you prepare for unexpected events.

Order some of your items from alternative suppliers to get the relationship going and to qualify them. If you can be agile in your ordering this allows you to shift suppliers if in an emergency.

2. Find local suppliers

Offshore suppliers seem like a great idea due to the cost of goods being a lot cheaper, however if the products won’t get to you in time, your customers aren’t going to be too satisfied.

Finding suppliers in your local area helps reduce supply chain risks from imported goods. Border closures, shipping complications and many other factors can greatly affect when your stock can be delivered.

If you have local suppliers on your side, you can continue to fulfil your customers orders.

3. Keep An Eye On Your Suppliers

During the 2020 lockdowns, a lot of businesses were artificially kept afloat and stayed trading. However, since jobkeeper and government stimulus has ended a lot of businesses that were trading that weren’t in the best financial position are entering administration.

Get an idea of their cash flow by performing a credit check. If they are having troubles paying their bills this means eventually this will come to affect your business.

4. Keep records on your suppliers

Suppliers can be merged, acquired or deregistered. They may change their address, directors, trading names, entity structures etc. If you aren’t up to date with this information your ability to mitigate risk is compromised.

Keep up to date with them and keep yourself well informed.