4 Ways to Diversify Your Supply Chain

Welcome to Driving What Matters! This monthly newsletter will share tips, insights, articles and more related to navigating today’s complex foodservice supply chain environment.

If you’re unfamiliar with National DCP, please allow us to introduce ourselves. We are a global provider of innovative supply chain solutions for the foodservice industry, currently serving over 10,000 quick service restaurants in the U.S. and distributing products to more than 40 countries. Our company’s expertise includes strategic sourcing of food and non-food items, distribution, manufacturing, business services, supply chain and full visibility, traceability, continuity, and sustainability of supply. You can learn more about us by?clicking here.

In this edition, we want to emphasize the importance of diversifying your supply chain so your business can continue operating effectively, even when facing unprecedented events and major disruptions.

Thanks for your interest and we hope you enjoy this newsletter!

4 Ways to Diversify Your Supply Chain

After spending nearly three years??navigating a global pandemic, geopolitical issues, labor shortages and more, you might be eager for a return to business as usual. However, experts believe that major supply chain disruptions will become more ordinary. A recent McKinsey Global Institute report predicted that most companies could expect major supply chain disruptions every 3.7 years.

With that in mind, it is essential to diversify your supply chain to pivot whenever the unexpected happens. ?That’s what NDCP has done in order to deliver exceptional service at the lowest possible cost when nothing goes as planned. While it was common for quick service restaurants to struggle to maintain supply in recent years, our team of experts and reliable supply chain structure ensured that the Dunkin’ restaurants we serve never ran out of straws, cups, or even coffee.

So how do you create a supply network to enable end-to-end visibility, collaboration, and optimization?

From our experience, here are four ways that your organization can diversify its supply chain:

1.??????Invest In Domestic Sourcing

Forming local partnerships is more important today than ever before. There are many mutual benefits to cultivating long-term partnerships with domestic businesses rather than low-cost, distant countries. To name a few, these advantages include easier communication, higher labor standards, greater cybersecurity, higher-quality products, reduced logistics costs and faster turnaround.

When you’re within the same state, region, or even country as your supplier or customer, it’s easier and more straightforward to set up meetings, communicate face to face, and develop the personal relationships that are necessary for a fruitful partnership. By being able to communicate face-to-face with the people manufacturing and handling your product, you gain confidence while ensuring you’re at the top of your supplier’s list. This clear communication helps you coordinate orders more effectively and leaves less room for errors. You’ll also gain more credibility in your customer’s eyes and can use it as a competitive advantage to attract new customers.

From a sustainability standpoint, domestic sourcing is also better for the environment, reducing fuel emissions and energy usage due to less shipping and storage needs.

2.??????Expand Your Supplier Base

Resilient supply chains are flexible supply chains. Instead of becoming reliant on a single supplier, flexible supply chains with multiple sources of supply can provide new opportunities such as introducing new products, increasing competition on price between current and potential new suppliers driving down your net costs, shortening time-to-market, and increasing margins—all of which can lead to sustained profitable growth.

Building reliable relationships with a diverse list of supply chain partners and logistics providers—especially if they’re local—can serve as an “emergency valve” that gets you through the next supply crisis.

3.??????Hedge Commodities

Hedging helps protect your organization from fluctuations in commodity prices and enables you to lock in a worst-case scenario price to reduce potential losses.

For example, in the spring of 2020 when the COVID-19 pandemic created a tremendous amount of uncertainty, NDCP took extremely favorable positions on multiple commodities. It was a strategy that paid off with hedging certain items at 10-year lows in pricing.?If we hadn’t taken such favorable positions on items like coffee and soybeans, NDCP members would have experienced 30%+ higher costs for those commodities. We booked buys up to 18 months out that helped us keep costs down during this extremely volatile time, when a number of ingredients have been selling at double or triple their recent prices.

Taking those actions meant we did not have to pass significant costs on to our members during the height of the pandemic.

4.??????Streamline Operational Measures

In an integrated supply chain, it is important to link together as many areas as possible to enable strong collaboration. With integrated logistics, supply chain, product innovation and financial strategies, companies are better positioned to predict demand and act accordingly. Today’s increasingly global supply chain needs to be able to spin on a dime and accommodate shorter product life cycles, emerging markets and fluctuating economies.

To effectively manage an innovative, collaborative supply chain, add these tips into your practice:

• Integrate. Every transaction typically touches several systems, including an organization’s CRM, ERP, manufacturing resource planning systems and financial systems. By adding an integration platform or middleware layer, information flows can be automated and shared more quickly and simply.
• Improve quality control. It’s easy to skip quality control processes when you need to get shipments out the door quickly, but errors are more likely to occur in fast-moving workflows.
• Analyze the data. This can reveal the most common errors and where they occur within your workflows. NDCP does this by our perfect order metrics—customer sat, OTD, OS&D, feedback on each level.
• Communicate. Be transparent with your customers what the issue is and what you are actively doing to work through it. Bonus points if you can differentiate yourself in what you are doing versus what the competition is doing.

Diversifying your supply chain makes your business more resilient no matter what lies ahead. What kind of pivots have you made in the past few years in dealing with unprecedented events?

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Curious to learn more about National DCP or foodservice supply chain best practices? Visit https://nationaldcp.com/.