How Distributors Can Build Supply Chain Resiliency in the Face of Change

Five years have passed since a global pandemic upended supply chains and transformed the way we do business. While the immediate disruptions of COVID-19 have largely faded, the ripple effects continue to shape the market.

Today’s supply chain environment is a far cry from what it was. New challenges have emerged, and distributors are adapting to a landscape that’s more complex, interconnected, and unpredictable than ever before. Geopolitical tensions, tariffs, labor shortages, and accelerating technological advancements are just a few of the forces driving change.

For large distributors, it’s no longer just about managing logistics; it’s about anticipating risk and staying agile. It’s about building supply chain resiliency.

Why Is Supply Chain Resiliency Always Important for Distributors?

Mitigating Disruptions

The ability to quickly adapt to disruptions, whether it’s a global crisis like COVID or a smaller, unexpected issue like a supplier’s overseas operation shutting down, can make or break a business.

With potential changes on the horizon due to election results and tariffs affecting goods from Canada, Mexico, China, and possibly more countries, many companies are concerned about how these shifts could affect their supply chains. This includes potential delays and the need to source alternative suppliers within the U.S.

Maintaining Customer Relationships

Even a slight delay, stockout, or supply issue can send customers straight to your competitors. A resilient supply chain means fewer disruptions and the ability to deliver consistently, keeping customer relationships intact, and ensuring your business doesn’t lose ground.

Handling Demand Fluctuations

Whether it’s a sudden spike or a drastic drop in demand, the pressure on your supply chain can be overwhelming. If you’re caught unprepared, you’ll either risk overstocking and tying up cash flow or find yourself scrambling to meet demand. A resilient supply chain ensures you can pivot, maintaining the right stock levels when the market shifts, without unnecessary waste or missed opportunities.

Complying With Regulatory Requirements

Compliance is a critical part of keeping your supply chain intact. From safety and sustainability to traceability, regulations are becoming more stringent. A resilient supply chain doesn’t just keep you in the game, it ensures you’re always on the right side of compliance, even as rules evolve.

How Distributors Can Become More Resilient

The following tips can help you adapt quickly to changing conditions, trends, and opportunities.

Diversify Your Suppliers

Relying on a single supplier or a limited group of vendors puts your supply chain at risk during disruptions. A resilient supply chain is built on diversity, whether that’s geographic, operational, or supplier-specific.

By diversifying your supplier base, you reduce the chances of a single point of failure. For example, if one supplier faces production delays due to a natural disaster like a wildfire, you can quickly shift to others. A wider range of suppliers also allows you to negotiate better terms, improve quality, and ensure consistent availability.

Additionally, diversification also protects against price fluctuations, giving you more flexibility when market conditions change.

You can track vendor performance in Microsoft Dynamics 365 Finance and Supply Chain Management. Sikich can provide dashboards and reports for this purpose.

Strengthen Supplier Collaboration

Supply chain resiliency doesn’t just rely on the ability to source from multiple suppliers; it also thrives on strong, proactive partnerships with those suppliers.

By maintaining close, collaborative relationships, you improve communication and transparency. Suppliers who view you as a valued partner are more likely to prioritize your orders during peak times.

Customer relationship management (CRM) tools in Microsoft Dynamics 365 help you document and manage commitments, conversations, and experiences with vendors and trading partners. In Sikich-led deployments of Microsoft Dynamics 365, we often deploy a secure vendor portal with your ERP system. The portal’s functionality can meet your requirements for what matters most in vendor relationships. Vendors can, for example, submit invoices, provide shipping updates, look up orders, or provide proposals.

Improve Inventory Management

By regularly monitoring your stock levels, lead times, and demand trends, you can anticipate shortages and adjust purchasing accordingly.

Implementing just-in-time (JIT) systems can minimize waste, reduce holding costs, and ensure you aren’t overstocking. Balancing this with safety stock can be an effective strategy to prevent stockouts when unexpected disruptions occur.

Additionally, consider implementing automated inventory systems that provide real-time data, improving forecasting accuracy and enhancing your ability to make quick decisions in the face of sudden demand spikes or supply issues.

In Microsoft Dynamics 365 Finance and Supply Chain Management, deployed by Sikich, you always have full visibility and meaningful analytics to tell you what inventory levels are and how they are trending. The master planning module is a critical engine. All inventory information resides in a single repository, so you don’t have to navigate data silos.

Embrace Emerging Technology

Artificial intelligence (AI), machine learning, and predictive analytics allow you to monitor your supply chain in real time, offering actionable insights into potential risks and bottlenecks.

• AI can help you forecast demand fluctuations, identify potential issues in your supply chain, and optimize routes to reduce delays.
• Predictive analytics can alert you to emerging trends, enabling you to stay ahead of market changes and adjust your strategy before they become larger problems.
• Cloud-based platforms allow you to collaborate across teams, streamline communications, and gain visibility into every stage of your supply chain, giving you the flexibility to adapt quickly when disruptions arise.

Explore how we can help your distributor business ensure supply chain resiliency. Connect with our distribution technology experts now.