Guide to Tackling Supply Chain Disruptions for Furnishing Retailers

Furnishing supply chains have faced significant crises in the past couple of years. Although this can easily be attributed to the Covid-19 pandemic, there are other contributing factors at play. Chief among them is the problem of supply chain disruptions. Frequent disruptions can easily hurt the bottom line for furnishing retailers.

The silver lining is that market experts have predicted a possible dip in supply chain issues later this year. Even so, an insight into the fundamental flaws of the supply chain is necessary to keep a business afloat until the clouds clear.

What is a supply chain?

A supply chain is a network of resources, individuals and companies that work in tandem. The process ideally begins at one end, i.e., from the raw material supplier. Raw materials (e.g. nylon, polyester etc.) go to the furnishing manufacturers who produce a finished, ready-to-use product (e.g., carpets, rugs etc.). This end product is then delivered to the end user.

Types of events that cause supply chain disruption

Supply chain disruptions can be as infrequent as a few days to even years or decades. These events can thus be classified as;

1. Low-severity events: These are events that have a low downstream effect. They cause minimal disruption to money and time. Examples of a low-severity event can be logistical flaws due to unfavorable weather conditions or hoarding of resources by a group of individuals.
2. Medium-severity events: The effect of these events may last from a few weeks to months, depending upon the initial conditions. Although they cause some downstream effects, their long-term effects are almost negligible. An example of a medium severity event would be a warehouse fire.
3. High-severity events: These effects have long-term downstream effects and may last for years. Geopolitical situations such as war or a pandemic constitute good examples of high-severity disruptions.

Factors causing supply chain disruption

The pandemic undoubtedly caused a significant disruption in the supply chain of multinational corporations and local businesses. However, it is merely one of the aggravating factors. Several other reasons have led to supply chain disruptions:

1. The US-China trade wars
2. Suez canal blockage
3. Labor crises; also known as The Great Resignation
4. Russia-Ukraine conflict
5. Climate change

Parts of a supply chain

The parts of a supply chain are distributed into two distinct components;

1. The entities: The entities are the network of raw material suppliers, manufacturers, distribution and shipping companies and retailers.
2. The functions: The functions in a supply chain refer to developers, the marketing team, the operations team, distributors, finances and customer service.

A sustainable supply chain is where the components are minimal and efficient. For the furnishing industry, it refers to fewer suppliers of raw materials such as wood, nylon, laminates, steel, hardware and plastic components. The fewer the number of such vendors and suppliers, the more rigid the supply chain.

For example, according to global market reports, around 35 to 40 percent of furniture is made in China. With the global pandemic still in full swing, this has resulted in unforeseen delays between the factory and the living room.

Shorter is Better

From the above example, we can infer that longer supply chains are more vulnerable to supply chain disruptions. Any event, however short term, can create a cascade of events at every level of the chain. This will lead the supply chain to become non-functional at any given moment.

According to an article in Forbes magazine, the pandemic has been a proving ground for supply chains. Forbes concluded that shorter supply chains are not only more resilient but also sustainable in the long term. The goal of supply management is to uncomplicate and shorten the chain. This both prevents unnecessary delays and reduces the consumption of fuel and energy, reducing the carbon footprint.

Steps to ensure an undisrupted supply chain

As any efficient businessman would say, ‘cut out the middle man’. This is a direct consequence of reducing sizes and uncomplicating the supply chain. The steps that furnishing retailers can take to achieve this are as follows;

• Alternative suppliers: The retailers should switch from overseas suppliers to domestic vendors who have minimal supply chains. Sourcing strategies should include diversification to maintain a continuity of business between the retailer and the end user.

• Chain management and control: It is even better to look for alternatives where the companies manage and control their own supply chains.
• Flow of information: Retailers should also consider building direct relationships with the manufacturers themselves. This not only reduces certain costs, but also allows free flow of information. It also ensures rapid decision making in cases of unforeseen events and thus maintains the flow of information and resources even in difficult times.
• Capital Reallocation: In case of crises, retailers should look towards redistribution of capital wherever possible by reallocating certain unnecessary budgets. For instance, instead of providing a free gift on a product, the retailer may choose to provide a cash discount, causing more units to be sold and increasing the overall profit.

Conclusion

As a retailer, one must expect a level of transparency from their principal suppliers. This helps to determine which of the aforementioned steps should be taken to ensure a healthy supply chain.

The ultimate goal for furnishing retailers is to keep the business running with no to minimum supply chain disruptions. Fashinza has helped several partner brands in implementing a 'no disruptions' objective. Sign up with us to improve your brand's customer satisfaction and keep your bottom line stable.