A supply chain disruption is any event that impacts a business from procurement to production. From a simple delay in a shipment to a major production shutdown, these disruptions can impact the ability of an organization to fulfill orders and maintain customer satisfaction.
While many of the causes of supply chain disruption are outside of a company’s control, a well-defined backup plan is essential to ensure that business operations can continue to run smoothly despite these challenges. This includes a comprehensive understanding of the types of supply chain disruptions that can occur and the steps to take to mitigate them.
There are numerous factors that can cause supply chain disruptions, but some of the most common include:
Health crises. The Covid-19 pandemic was a stark reminder that even localized events like disease outbreaks can affect the entire supply chain. In fact, one disruption in a single region can have ripple effects across the globe, including shipping delays, plant shutdowns, and labor shortages.
Natural disasters. Floods, wildfires, and hurricanes can damage warehouses, transportation routes, or factories, creating a bottleneck in the flow of raw materials. These disruptions can lead to delayed production schedules, increased costs, and dissatisfied customers.
Geopolitical issues and trade policies. Civil wars or currency devaluations can affect the availability of certain raw materials in one country, while tariffs and other trade barriers can have global consequences that may halt production or raise prices.