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Even when a company has an established supply chain, supply chain issues can cause numerous problems for a company. Supply chain problems can be overwhelming for a company. It can result in lost revenue and customers. Supply chain issues can also increase production and other costs. Resolving supply chain issues ASAP is crucial to avoid costly consequences. Our Texas business attorneys discuss this issue in this blog.

Problems Caused by Supply Chain Issues

A supply chain problem occurs when one or more steps in the supply chain process are disrupted. The result is delays in delivering products or meeting customer demands. Problems a company faces because of supply chain issues include:

  • Increased production costs reduce profit margins
  • Delays in delivering products to customers may result in lost sales and revenue
  • Customers may find alternatives, impacting future sales
  • Delays in delivering products and damaged goods can result in a decline in customer loyalty
  • Negative customer reviews can harm a company’s brand reputation
  • A business may over-estimate the need and stockpile inventory, which can increase storage costs
  • Shortages because of supply chain disruptions can result in missed sales opportunities
  • Breaches of contract when businesses cannot deliver goods on time
  • Employees may question their job stability, which can impact productivity
  • Supply chain issues may result in compliance with regulatory requirements for some companies

Issues with the supply chain can result in legal and financial consequences. Resolving the issues as quickly as possible can mitigate the harm caused by the supply chain issues.

Steps Businesses Can Take to Mitigate the Impact of Supply Chain Issues

A disruption to your supply chain can have devastating effects on your business. Ways to mitigate the consequences and resolve supply chain issues include:

Maintain Extra Inventory

Having more inventory on hand can help you be prepared when supply chain issues impact your ability to obtain goods. It helps to avoid telling customers you are out of stock and cannot meet their needs.

Reduce Return Rates

Lower the number of returns by providing detailed product descriptions so customers have all the details before buying a product. Charing a return fee can also discourage returns. Instead, customers can return products to the store for store credit without a return fee.

Diversity Product Sources

Anticipate there will be supply chain issues at times. Diversify the sources of your products. If one source experiences supply chain issues, you continue to receive products from other sources.

Be Proactive with Risk Mitigation

Develop and implement a risk mitigation plan for supply chain issues. Invest in technology for real-time management of supply chains. Establish backup solutions if your primary supply chain has problems and test contingency plans to ensure they are effective.

Communicate with Customers

Be open and honest with customers when supply chain issues impact your ability to deliver services or products. Keep customers updated to manage expectations and increase trust.

Build Strong Relationships with Suppliers

Nurturing your relationships with suppliers can benefit you during supply chain problems. Suppliers are more likely to prioritize your needs and collaborate with you on solutions to the supply chain issues.

Review and Assess Your Supply Chain

Regularly review and assess the strength and stability of your supply chain. Be willing to change and redesign your plan to reduce dependence on distant and specific suppliers. Always look for local and multiple sources for supplies.

Contact Our Texas Business Attorney for More Information

Do you need legal advice regarding distribution and supply chain issues? Contact Sul Lee Law Firm PLLC to discuss your concerns with an experienced Texas business attorney. Our attorneys can help you with a wide range of supply chain issues.