What to Expect From Supply Chains In 2022 (and How to Minimize Risk of Disruption)

Supply Chain for Products. Learn to Avoid Disruption

This past year has been a tough one for global supply chains. From port blockages, to supply shortages, to labor constraints, to container insufficiencies, the level of disruption seemed to be unceasing for businesses both large and small. 

Now, as we look forward to the remainder of 2022, experts say these supply chain woes aren’t expected to disappear overnight, but businesses are hopeful disruption will decrease, allowing them to adopt new strategies that will drive efficiencies and lower costs. 

As is true with most crises, many companies have been able to use this disruption as an opportunity to take a step back and evaluate their supply chain systems, identify weaknesses, and adjust them to gain better resilience and flexibility.

And while the future still remains uncertain, companies can still gain insight into what’s to come for 2022 and beyond, and discover how to minimize further risks and negative impacts on their supply chains.

Common Supply Chain Disruptions to Look for

With the novel coronavirus outbreak, the world has witnessed firsthand how public health crises impact global supply chains. Due to the widespread number of people, regions, and international companies affected, these types of crises can throw a wrench in normal, everyday production operations. 

Furthermore, the combination of the pandemic with recent natural disasters has created even greater disruption. According to Bankrate, 2020 and 2021 were reportedly the worst years on record for the most natural disasters. In 2021, the total cost of natural disasters amounted to $145 billion in damages — ranking it as the third costliest year for natural disasters thus far. 

Now, as we reach the halfway mark for 2022, dozens of thousands of wildfires, hurricanes, and tornadoes have already been reported. These types of disasters can upend supply chains by postponing deliveries, closing ports, canceling cargo flights, and teetering the balance of supply and demand. 

Speaking of supply and demand, perhaps the most famous example of such disruption is the great toilet paper fiasco of 2020, where we saw a rapid increase in supply shock and panic buying situations. 

And that was just the tip of the iceberg. Other supply chain leaders began experiencing similar short-term shocks with devastating effects that demanded a deeper structural reform. This led to the identification of further weak spots, such as poor quality management, processing delays, transportation failures, and rapid price changes.

The Russo-Ukrainian War: Key Export Categories to Suffer

While the disruptions from the pandemic are still materializing, other world events have only added to the chaos. Today, experts are expecting to see the most disruption in five key export categories: agricultural products, metals, manufacturing, chemicals, and oil and gas. 

Coincidentally, all of these export categories have already taken a hit with the recent war on Ukraine. Since the beginning of the conflict, countries have announced economic sanctions and termination of operations with Russia, and companies have pledged refusals to carry Russian goods. 

In retaliation, Russia has banned the export of over 200 goods to western countries. And since over 300,000 U.S companies rely on some form of imports from either Russia or Ukraine, it should come as no surprise that companies are scrambling for product alternatives. But trade deals aren’t made overnight, and these decisions will disrupt many companies’ supply chains at every level — from initiation to completion.  

Minimizing Risk of Further Disruption

Drawing from the tumultuous experiences of 2020 and 2021, companies have been able to start planning ahead to fortify their supply chains for the coming year. The first key to surviving any crisis is having an emergency backup plan.

Companies should ensure they have a consistent line of communication with all suppliers, clients, customers, and investors. When uncertainty strikes, everyone involved in your company should know what’s happening, and what you’re doing as a company leader to combat against it. 

This will allow you to plan ahead and create an emergency budget that can be used in case of a disruption. Secondly, you should consider building up a surplus of stock — primarily your most popular products. Determine your most essential goods, and stockpile the supplies that will be necessary to keep your business running for months at a time. 

Then, you should get in touch with a logistics expert to conduct a risk analysis and determine which areas are threatened with the most risk. This will help you identify vulnerabilities in your supply chain, allowing you to search for alternatives ahead of time.  

Tapping Into Technology for Solutions

While there are many factors contributing to supply chain disruptions, businesses aren’t entirely powerless. Fortunately, the advancement of technology has allowed companies to utilize helpful tools and resources to monitor their progress, predict slowdowns, and plan for recovery. 

“The issue is not supply chain disruptions in themselves; the issue is that we have optimized supply chains to the point where even small disruptions can have disproportionately big impacts,” details an article written by the Forbes Expert Panel

Today, companies should be using technology to establish greater resilience and flexibility to anticipate uncertainty. By obtaining real-time data on your supply chain, your company can precisely determine your intersection of supply and demand, constructively acquire products, and discover any potential risks with suppliers.

Finding a Supply Chain SaaS platform that reduces the risks involved with global manufacturing, automates the process of product production, and aids in the operation and management of supply chains from a single vantage point should be at the top of your company’s priority list.

Defining a New Supply Chain Model

While integrating short-term solutions might ease disruptions for a period, companies need to work to redefine their entire supply chain systems. COVID-19 and further disruptions have illustrated that many companies do not have enough insight into the vulnerability of their supply chain relationships to global events. 

To effectively build resilience in your management systems, company leaders should look to connect with their supply network to open greater end-to-end visibility, agility, and optimization. By keeping an eye on trending disruptions and leveraging the power of technologies, you can fortify your company’s supply chain to combat even the most unexpected scenarios.