How do you become less dependent on one supplier or route?

An unexpected situation can have a major impact on your business. How vulnerable are you if war breaks out somewhere? Or in the event of a blockade, a strike, or extreme weather? Find out how vulnerable your business is and what you can do to make it more independent.

Even if you have a reliable supplier, something might happen that prevents them from delivering. What impact would it have on your business if you had to wait a long time for a delivery?

  1. How strongly does your business depend on others?
  2. Which products or parts are vital?
  3. When is it smart to stock for emergencies?
  4. Arrange solutions before something happens
  5. Make an emergency plan

1. How strongly does your business depend on others?

Many business owners only realise just how vulnerable they are when something goes wrong. It does not necessarily have to be a war. Delays at customs or a shortage of containers can also mean that a delivery takes weeks longer than planned.

Routes

Know where your raw materials, components or products come from. What routes do they take? And where are your main customers located? This will help you work out which countries, regions, or routes you are dependent on.

Suppliers

What do you do if your main supplier fails to deliver? Do you have another supplier lined up who can deliver straight away if necessary? And if so, are the prices, quality, and delivery times comparable? If not, start looking for other suppliers now.

Stock

How long can you keep operating without a delivery? Work out how much stock you currently have and how long it will last. What is the minimum stock you need to keep operations running?

Feyzi Tan is a supply chain manager at Go-Tan, a supplier of Asian food products. In 2021, he had a container on board the Ever Given, the cargo ship that was stuck in the Suez Canal. Tan's supplies only arrived in Rotterdam months later. “We decided to play it safe and ordered an extra container straight away. The cargo ship carrying this container overtook the Ever Given by a wide margin. That meant we were able to quickly replenish our stock.”

2. Which products or parts are vital?

Not all products or parts are immediately essential. Draw up a list of items that would bring your business to a standstill if you were unable to get them. Also note which parts would be difficult to replace.

Some examples:

 Product or part

 What if it is no longer there?

 Is there an alternative?

 Action

Building materials

Work comes to a halt

No

Build up stock

Ingredients for your most popular dish

Cannot make the dish 

Yes, different supplier

Find second supplier

Product for your online shop

Clients cannot order it

Yes, different supplierFind second supplier

Spare part for a machine

Production comes to a halt

No

Build up stock

You can see straight away what your next steps are. Sometimes it is possible to find an additional supplier. If that is not possible, then building up or expanding your stock will help.

3. When is it smart to stock for emergencies?

Keeping your stock levels low has its advantages. It reduces storage space and costs. A large stock is therefore not necessary for every business, but building up a strategic stock is a wise move.

Think about what you need to keep your business running. Ask yourself questions such as:

  • Which products generate immediate turnover?
  • Which parts are difficult to replace?
  • How many days or weeks can you manage without a new delivery?
  • What would it cost if your business came to a standstill?

An emergency stock costs money and takes up space. So work out what is cheapest in your situation: an extra stock worth a few thousand euros, or a week of downtime or dissatisfied customers? Also take into account how long the product will keep (shelf life) and remain up-to-date.

Sometimes, a large stock can actually be a smart choice. Erik de Jong of BouwFactor, an importer and seller of timber, noticed this. During the corona pandemic, there was a shortage of timber and containers. Import duties also led to extra competition from the United States. De Jong: “At the time, I bought from my German supplier at a higher price. I also paid extra for a shipment of timber from Surabaya. It was a large stock. But in hindsight we were so glad that we accepted the price rises and bought in on time. All around me, I saw that competitors were actually left without any timber.”

4. Arrange solutions before something happens

Take action before you run into problems. Thanks to your research, you know where your vulnerabilities lie. The next step is to find solutions. For example:

  • Look for one or more additional suppliers. Choose suppliers in different countries or regions and do not just look for the lowest price. Are there options in the Netherlands or Europe?
  • Think about how suppliers and customers can contact your business in an emergency.
  • Arrange alternative ways to communicate in case, for example, the Wi-Fi goes down. Such as a mobile hotspot or a paper list of customers’ addresses.

5. Make an emergency plan

Draw up a brief and clear emergency plan. This should include, for example:

  • Contact details: who do you call in an emergency?
  • Alternative suppliers: who can you turn to if your usual supplier is unavailable?
  • Minimum stock levels: what quantities do you need for each product or component?
  • Alternative routes: which route or carrier do you use if the standard route is blocked?

Make sure your staff are aware of this plan and that they can find it in an emergency. You cannot prevent every disruption, but every step counts. An additional supplier, a small stock, or a different route can make all the difference.