4 Supply Chain Strategies to Use in Volatile Markets

Supply chains across the world are being tested in ways that they’ve never been before. The COVID-19 era has arrived, and in the years preceding this unique time, supply chains rapidly expanded in distance and scale making them extremely vulnerable to widespread geographic disruptions. The extent of the impact has also been made worse by overly aggressive lean methodologies and just-in-time inventory strategies trying to squeeze every last drop out of the cost lemon. But smart and nimble companies are now moving quickly to limit the damage and find creative ways to solve supply chain challenges.

Below are crucial strategies to use in both the short and long term to quickly get ahead of your current market challenges and protect your business from future disruptions.

4 Supply Chain Strategies to Use in Volatile Markets

A major key to success during volatile times is using a Plan For Every Part (PFEP) to rapidly assess new risks and implement mitigation strategies. A PFEP is just that: a detailed end-to-end plan for all the parts in your product or products. It answers the questions of where you source your product inputs from to how much they cost and how they’re made. Traditionally, PFEPs have lived in multiple spreadsheets that get tossed around via email between team members; a practice ripe for errors. Questions arise as to the age of the data, who changed what and when, and what if someone deleted some data and we all missed it? Furthermore, even with good documentation control, unnoticed errors get propagated leading to additional inaccuracies and potentially poor decisions down the line. The solution? To leverage a cloud-based PFEP with a specific column structure that restricts significant changes and allows multiple parties to collaborate from anywhere in the world.

In volatile times, one action you must take is to secure the resources necessary to continue operations. These resources come in the form of information, inventory, and outsourced operations. To capture them, you must work closely with your supply partners deep in your supply chain to ensure you have what you need.

Information Sharing

During tough times information is like gold. The more information you have and the higher quality it is, the better decisions you can make. This is why it’s important to transparently share information such as current inventory levels, available production capacity and stocked raw material. Sharing this information openly throughout all levels of the value chain opens the opportunity to work together to achieve a better outcome through collaboration.

Secure Critical Inventory

Inventory is the lifeblood of your operations Coming in many different forms, this could be raw material, finished goods, or data. In times of volatility, it’s vital that you acquire these resources to protect your business operations. Look deep in your supply chain to achieve this. Is there a Tier II or III supplier who provides crucial raw material somewhere along the value chain? It may be beneficial to reach out directly to the deeper-tiered suppliers, purchase their on-hand raw material and consign it to your Tier I supplier because you might not be able to count on your Tier I supplier to act quickly to ensure you have what you need.

Build Strong Supply Partnerships

It’s important to have and to strengthen your supplier relationships so that when markets shift quickly you can rely on each other to create a better collective outcome. This doesn’t happen overnight and must start before the political capital needs to be leveraged. Focus on building a win-together relationship with your supply base so there’s a foundation of trust that’ll exist in difficult business environments.

Utilizing a vendor managed inventory (VMI) relationship is a powerful way to combat market and demand volatility while reducing working capital costs. Under a VMI strategy your organization can store inventory within your supply partners’ walls at a fraction of the cost it would be to purchase and store at your location. Furthermore, implementing a VMI strategy will strengthen your vendor relationship, which is invaluable when operating in an unstable market.

When market uncertainty significantly increases, it’s critical to reduce and focus your operations to ensure you’re prepared for the choppy waters ahead. To help conserve your organization’s resources, explore the following areas with your team.

Reduce Product Offerings

In times of growth, product offerings tend to explode to maximize revenue; however, when markets shift and headwinds become formidable, businesses must start focusing on how to conserve resources. At this point, products aimed at niche markets tend to become more of a burden then a revenue driver and a good target to stop producing to conserve resources. Eliminating a nuanced, slow-moving product will reduce inventory requirements and make shared pools of inventory available to more important products.

Postpone Product Customization

Another strong strategy to conserve internal resources is to delay the customization of products until sales are final. This will considerably reduce your resource burden by allowing multiple product lines to share raw material pools or input inventory.


Turbulent times call for decisive actions to ensure your risks are appropriately mitigated, so look closely at the ideas outlined above. Doing what you can now and putting in place new best practices and insurance policies will pay huge dividends during future market and supply disruptions.

Supply Chain for Tomorrow’s Technology. Ann Arbor, MI.