Regional conflicts, supply chain disruptions, and lower productivity have all presented consistent challenges in recent years. The cost of these events in an environment with high interest rates and inflation, where some companies have seen their cash reserves dwindle, has the potential to derail strategic objectives.
As companies are jumping from crisis to crisis, how to balance light distribution and manufacturing footprints versus greater redundancy and backups is top of mind for management. What are the long-term impacts of any potential event? What is the economic impact of missed sales, lost customers, and unplanned penalties to manufacture and deliver products?
We have seen these scenarios play out across many industries, but the consumer products space has been particularly impacted. This is true whether a company is small or large, public or private, private equity owned or founder owned. As a business owner and operator, how many times can force majeure be used as a reason why your business is struggling?
Make sure you aren't “putting all your eggs in one basket” operationally and take the following actions:
- Add manufacturing and distribution footprint risks to your planning and long term strategy meetings.
- Talk to your suppliers, contract manufacturers, and distributers about what their back-ups are and source potential external options if internally managed.
- Ensure business cases on gaining market share or achieving cost savings include operational risks and how they are mitigated.
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