Have you ever had trouble finding a particular item in stock at a store when it’s usually so easy? Or maybe you’re waiting for a package from overseas that’s suddenly delayed for weeks with no clear news? Well, chances are you’re feeling the impact of something called supply chain disruption. This is a type of disruption that can greatly affect our daily lives.
The term may sound technical, but it’s actually easy to understand. Imagine a supply chain as a long, busy highway where raw materials, components, and products move from one point to another. Supply chain disruption is when there is a “severe traffic jam” or a “major accident” on the highway so that the flow of goods movement is hampered or even stopped altogether. We are talking about a major disruption that can cause a domino effect.
Kenapa Supply Chain Disruption Itu Penting Banget?
Supply chain disruptions don’t just make you feel bad because your desired items become scarce. The impact can be very broad and serious for companies, even the global economy. Every disruption has consequences.
- Product Scarcity: This is the most immediate one. If supply is hampered, goods become scarce in the market. Remember during the COVID-19 pandemic? Many items, from masks and hand sanitizers to computer chips, were suddenly hard to come by due to global-scale disruption.
- Price Increase: When goods are scarce, the laws of economics apply: prices tend to rise. This can burden consumers and cause inflation. A disruption can trigger significant price spikes.
- Decrease in Company Revenue: If the factory cannot produce because raw materials are stuck or finished products cannot be delivered to customers, the company’s revenue will automatically drop dramatically. This is the direct loss of a disruption.
- Reputation Damage: Customers who are disappointed by late or canceled orders may switch to a competitor. This damages reputation and customer loyalty. The reputational impact of disruption is often long-lasting.
- Layoffs and Economic Crisis: On a larger scale, severe and prolonged supply chain disruptions can cause layoffs in many companies and even trigger an economic crisis. This is a form of macroeconomic disruption
What are the Causes of Supply Chain Disruption?
Supply chain disruptions can be caused by a variety of things, from the unexpected to internal operational issues. Each cause can trigger disruption.
- Natural Disasters: This is a classic cause. Earthquakes, floods, storms, tsunamis, or volcanic eruptions can damage factories, warehouses, or transportation lines, bringing supply to a halt. An obvious example is the earthquake and tsunami in Japan in 2011 that disrupted the global supply of electronic components, causing major disruption.
- Global Pandemic: As we experienced with COVID-19, mobility restrictions, factory closures, and lockdowns in various countries caused massive disruption to the production and delivery of goods around the world.
- Geopolitical Conflict and War: Armed conflicts or political tensions between countries can close trade routes, impose sanctions, or damage infrastructure, disrupting supply chains. For example, the war in Ukraine impacted global grain and energy supplies, a disruption that was felt around the world.
- Transportation Issues: Ship accidents in important canals (such as the case of the Ever Given ship in the Suez Canal), severe congestion at ports, strikes by transportation workers, or a shortage of containers can cause disruptions. These can all trigger operational disruption.
- Economic or Financial Crisis: Extreme currency fluctuations, banking crises, or recessions can affect a company’s ability to purchase raw materials, invest, or even pay salaries, disrupting the smooth operation of the supply chain. A financial disruption.
- Cyber Attacks: A ransomware attack or hacking of IT systems can cripple logistics operations, stop tracking, or disrupt warehouse management. The threat of cyber disruption is increasingly real.
- Supplier Failure: If one key supplier experiences problems (e.g., bankruptcy, quality issues, or a factory fire), this can trigger a domino effect throughout the supply chain. A disruption at one point can have far-reaching effects.
How do companies deal with it?
Facing supply chain disruption requires careful strategy and preparation. Companies must build supply chains that are more resilient and adaptive to any disruption. Some of the ways include
- Diversify Suppliers: Don’t just rely on one supplier. Having multiple options from different locations can be a lifesaver when one supplier goes wrong, reducing the risk of disruption from a single source.
- Supply Chain Visibility: Using technology to see in real-time where goods are and what is happening at each stage helps anticipate disruption.
- Proactive Risk Management: Identify potential risks before they occur and prepare contingency plans to deal with any disruption that may arise.
- Digital Technology Investment: Adopt solutions such as artificial intelligence (AI) for prediction, big data analytics for analysis, and IoT systems for tracking. This enables faster response and better decision-making in the face of disruption.
Seeing how complex this issue is, competent and knowledgeable human resources in the field of logistics and supply chain are needed. S1 Logistics Engineering, as one of the leading educational institutions in Indonesia, plays an important role in producing graduates who are ready to face this challenge. With a relevant curriculum and modern facilities, S1 Logistics Engineering students are equipped with a deep understanding of supply chain management, including how to identify, analyze, and overcome supply chain disruption in the real world.
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