This article was originally published in March 2022 and has since been updated in May 2023 based on new trends, discoveries, and research.
Sourcing raw materials is a crucial part of many businesses, but it can come with some inherent risk, and you can face a variety of challenges.
For example, some materials might not be ethically sourced.
You may also have unexpected delays in getting those raw materials delivered to where you need them. Those delays can back up your processes and may continue to plague you long after the initial sourcing process is over.
Sound familiar? The last couple of years have shown us powerfully how even minor problems with the supply chain can escalate into substantial issues that can impact your entire business. From shortages of certain materials to overall supply chain disruptions, businesses need to take steps to minimize the risks that can come with sourcing raw materials.
Fortunately, there are some new strategies for 2023 and beyond that you can use to improve your raw material sourcing, and to better maintain your supply chain. These strategies can help you enhance resilience and can allow you to have a more reliable and predictable supply process.
1. Take Steps to Prepare Against Disruptions
Experts say that supply chain disruptions are expected in 2023, due to varied reasons, such as global conflicts and economic issues. Whether or not they pan out this year, it’s always wise to take steps now to be prepared in case disruptions do happen in the future.
To avoid issues and mitigate risks, you can take certain steps to prepare your business against unplanned disruptions. For example, instead of simply saying you’ll find alternative suppliers in a disruption, have a plan in place. Identify who your alternative suppliers are, and calculate how changing to these suppliers will impact your bottom line. You can also work to develop excellent relationships with your suppliers, so that in case something is amiss, you know you’ll have clear communication, and that your partners will go beyond to support you. Diversifying your suppliers goes a long way!
Other techniques you can use to prepare for disruptions include adopting real-time digital tools to help ensure your data and forecasts are 100% accurate. Tools like inventory analytics and supplier tracking allow you to know what’s happening with your business, meaning that, if necessary, you can quickly make new decisions using accurate information.
2. Source Locally When You Can
Local sourcing has a few critical advantages. Primarily it makes it easier to determine whether your materials are ethically sourced, since you’re able to get more information about your source. Next, it’s often easier to get local materials to you, with fewer delays–and you may be able to bring them in faster when your inventory needs change suddenly.
Pay attention to where your materials providers are getting their materials to help better maintain your supply chain. If your providers are sourcing their materials from overseas or even across the country, you may encounter delays despite the steps you have taken to localize your sourcing.
3. Build a Diverse List of Sources for Raw Materials
Diversity is always a wise approach, and your raw materials sourcing is no exception. Sole sourcing, in some cases, may be less expensive, but it also means that you are entirely reliant on that source for your vital materials. If there are shortages and challenges that impact that supplier, you may find it impossible to overcome them for your own sourcing needs. On the other hand, if you have diversity in your sourcing, you may find that you can still bring in some of the raw materials you need even when challenges impact other areas of your supply chain.
Suppose, for example, that there is a shipping delay that impacts raw materials coming from overseas. If you have a local source for those supplies, you may still be able to support at least part of your usual production and keep your customers happy, even if things aren’t going entirely according to plan. Sourcing from multiple countries, when you must bring in overseas materials or supplies, can also help ensure a steady stream of supplies.
4. Increase Your Available Inventory
If you’ve found yourself struggling to provide the supplies your customers need, consider ways that you can increase your own available inventory. You may need to invest in additional warehousing options to maintain that higher level of inventory, but it can prove incredibly beneficial to your entire business.
With the right supply chain planning solution, you can get a better idea of what supplies you need to have on hand: what your customers really need, not just immediately, but in the near future. When you have the supplies in your own warehouse, you can often better manage your overall inventory.
The inventory in your warehouse also puts you in a better position to weather potential supply chain problems, which means you may be better positioned to keep your customers happy even through a shortage or other problem.
Keep in mind, however, that you must accurately predict your inventory and supply needs for increasing your inventory to do you any good. You must also continue to track the inventory you have on hand so that you can use it effectively, rather than allowing it to gather dust in a warehouse or get damaged. Furthermore, if you have perishable goods, there may be a limit to how many you can keep on hand.
5. Stay Up To Date on Sourcing Trends
Today, sourcing and supply chain trends move at the speed of light. In just weeks, days, or even hours, things can dramatically shift. This can impact the way you’re able to get materials, the prices of your materials, and influence any delays or shortages. Instead of being blindsided, you can take steps to stay ahead of the curve, by staying up to date on sourcing trends and news.
In order to do this efficiently, you can easily set up news alerts (Google Alerts is helpful for this) involving sourcing and supply chain changes. Next, you can also do a quick online search one or two days a week, to see what the latest stories are. Third, you can also touch base with your suppliers and distributors regularly, and check in to see how they’re doing, and if they’re seeing any first-hand impacts, you should be aware of.
When you’re looking to stay informed of industry and sourcing trends, look out for things like changes in regulations, resource availability, price fluctuations, updates about supply chain risks, and overall market trends.
6. Connect with a Distributor
Distributors often can help find additional resources when you are struggling with your primary supply source. They usually buy and sell on a global level, which means they can keep up with current trends and provide you with the most cost-effective solution to your current supply chain needs.
Often, distributors also have resources well beyond the ones you can access on your own, which means they may be able to find supply pathways or solutions that will help you over a difficult patch.
If you work with a distributor on a regular basis, you may find that they can help build your supply chain and your inventory for potential future shortages or help you navigate and avoid problems that may become more serious.
7. Take Advantage of Digital Tools & Processes
The future is increasingly digital, and the sourcing industry is no different. Today, there are a plethora of tools and systems you can use to digitize your operations, to get things done more efficiently, more accurately, and to get better data around your work. For example, warehouse automation involves using digital tools to automate your regular warehouse management, and might include moving inventory within your warehouse, moving inventory in and out of your warehouse, and ensuring that inventory reaches customers efficiently and effectively.
You can also take advantage of inventory forecasting software, to prepare for unexpected downturns and to protect your business. Tools like these help you prepare for the goods your business will really need to offer; in the event a downturn does happen.
8. Leverage a Consignment Approach When Possible
Sometimes, to manage your inventory effectively, you may want to use a consignment approach: you send your products to a distributor but maintain ownership of them until they are sold. Once they’ve been sold, the distributor will pay you for them. Platforms like Amazon FBA, for example, can take care of many warehousing responsibilities for you, which may allow you to maintain greater overall inventory without expanding your existing warehouse solutions.
A consignment approach can cause problems if you fail to properly forecast demand for your products. However, by using the right supply chain management solution, you can often effectively predict trends, manage inventory, and ensure that you have the right products on hand.
Navigating supply chain challenges has become increasingly difficult for many businesses in the past few years. Sourcing raw materials, including ensuring that you have a steady supply of the materials you need, can be difficult. With these strategies, however, you may be able to do a better job of sourcing the materials you need, maintaining your supply, and increasing overall satisfaction.
Do you need a supply chain management solution that can help you better track and keep up with your needed supplies? StockIQ can help. Contact us today to learn more about how our solutions can benefit your business.
