From supply chain issues to major world events, disruptions throw your operations off course. But what if you could not just survive these challenges, but come out stronger?
The key is business resilience — the ability to thrive even when things go wrong. And a large part of that is strategic inventory management. It’s about having the right products in stock at the right time so you’re always ready to meet customer needs.
Here’s a guide to turning inventory from a potential problem into a valuable tool for building a stronger business.
Business resilience versus business continuity: What’s the difference?
So, what is business resilience? And how does it differ from other strategies, like business continuity? Here’s a quick guide to their differences:
- Business continuity is a company’s ability to maintain essential operations during a disruption. This might involve having backup systems, redundant suppliers, or alternative work arrangements to ensure critical functions continue.
- Business resilience is like continuity — and then some. It refers to a company’s ability to adapt, recover, and even thrive in the face of disruptions, not just continue performing. It’s about having the flexibility and agility to pivot a business model, adjust business resilience strategies, and seize new opportunities that may arise from a crisis. A resilient business not only survives a disruption but emerges stronger and more competitive.
4 ways to build business resilience
Building a resilient business requires a multi-faceted approach. Here are several key strategies to fortify your company against disruptions and position it for long-term success.
1. Build operational resilience
Take a hard look at your operations and identify any weak points that could falter during a crisis. Is there a single supplier for a critical component? Are systems outdated and prone to failure? Find any weak spots and find a way to fortify them.
By diversifying suppliers, implementing redundant systems, and investing in modern technology — alongside any other fixes — you create a more robust and adaptable operation that withstands unexpected shocks.
2. Embrace workplace automation and technology
Manual processes are a major drag on efficiency and productivity. By automating repetitive tasks and leveraging technology solutions like Fishbowl, you streamline operations, reduce errors, and free up employees to focus on more strategic initiatives. This improves day-to-day efficiency and enhances your ability to respond to disruptions.
3. Enhance spending transparency
In times of crisis, every penny counts. By maintaining spending transparency, you can identify areas that need a tighter budget and reallocate cash to support critical operations. This can be as simple as using a budgeting tool or as sophisticated as implementing a spend analytics platform. The key is to clearly understand where money goes to make informed decisions when it matters most.
4. Foster agility
Agility is the ability to adapt to change right when it happens — not days, weeks, or months later. Foster agility by encouraging a culture of innovation. Empower employees to make autonomous decisions and be open to new ideas and approaches. A business that responds quickly to changing circumstances is a business that’s built to last.
Inventory management is crucial for agility because it helps you adjust stock levels and fulfillment strategies to meet changing demands. For example, keeping safety stock for valuable products prevents you from running out when supply chain delays arise.
How to create a business resilience plan in 7 steps
A well-crafted business resilience plan is a roadmap to navigating the unexpected. Here’s a step-by-step guide.
1. Identify potential risks and vulnerabilities
First, assess the risks that make your business the most vulnerable. Consider industry, location, and any other factors with potential dangers. If you rely on tight digital security, include cyberattacks as a risk. If you live in a tornado-prone area, include storm damage to the warehouse or inventory.
2. Evaluate the impact of each risk
After identifying possible risks, assess their potential impact. How would a disruption affect operations, finances, and other key areas? Prioritize contingency plans based on the risks’ potential severity and likelihood of occurrence.
3. Develop a detailed response and recovery plan
Create a comprehensive plan outlining the specific actions to take when things go wrong. This should include procedures for communication, data backup, and recovery of critical systems. The more detailed the plan, the better equipped you are to respond effectively.
4. Engage all stakeholders in planning and execution
A resilience plan isn’t just for management. It should involve everyone in the organization, from employees to suppliers to customers. To ensure a coordinated and efficient response, everyone should understand their roles and responsibilities in a crisis. Detailed, accessible documentation keeps everyone on the same page.
5. Conduct regular testing and drills
A plan is only as good as its execution. Regularly test it through drills and simulations to identify weaknesses and ensure everyone is prepared to respond effectively in a real crisis.
6. Review and revise the resilience plan regularly
A business isn’t static, so a resilience plan shouldn’t be, either. As the organization evolves and new risks emerge, review and update plans accordingly. This way, it stays relevant and effective in changing circumstances.
7. Monitor external factors
Keep tabs on other external factors that could impact the business, like changes in regulations, economic trends, or emerging technologies. By staying informed and proactive, you anticipate potential disruptions and stay as resilient as possible.
How to measure business resilience
To truly understand a strategy’s effectiveness, you need to measure it. Here are some key areas to assess:
- Risk management: How effectively do you identify and mitigate potential risks? Are you regularly conducting risk assessments and updating the plan accordingly? A proactive approach to risk management minimizes disruptions’ impacts.
- Response time: When something goes wrong, how quickly does your business detect it and activate the recovery plan? Time is of the essence in a crisis, and a swift response is the difference between a minor setback and a major catastrophe.
- Recovery time: Once a disruption occurs, how long does it take to recover and return to normal operations? This is a key indicator of resilience and can help you identify areas for improvement in recovery processes.
- Adaptability: How well do you accommodate changing circumstances? This includes updating processes, adjusting budgets, and responding to new regulations or customer needs. A resilient business pivots in the face of change.
- Supply chain: How resilient is the supply chain to disruptions? Do you have multiple suppliers for critical components? Can you promptly identify and address bottlenecks? A strong and adaptable supply chain maintains business continuity and resilience.
How effective inventory management builds business resilience
When it comes to maintaining stock and pleasing customers in the face of challenges, resilience starts with an inventory management system.
Tools like Fishbowl facilitate everything from automating replenishment to gaining real-time visibility into inventory levels and supply chain performance. Predict and address disruptions for more proactive decision-making.
Fishbowl offers several features to plan for and mitigate supply chain issues.
- Vendor management: By allowing for multiple suppliers, Fishbowl ensures that if one fails, others fill the gap, providing a safety net for supply chain continuity and reducing the risk of disruptions. Fishbowl lets you set up default vendors and track inventory by source. Collect the right products from reliable suppliers and improve visibility into their performance.
- Dropshipping: Fishbowl supports dropshipping, which refers to outsourcing inventory management to third-party suppliers. This reduces the need for physical storage space and minimizes the risk of overstocking or stockouts, letting you respond more effectively to changing market conditions.
- Transfer orders: This feature offers the tools to allocate inventory across multiple locations. Transfer orders between different warehouses, balancing inventory levels and reducing the risk of stockouts or overstocking. This feature also improves responsiveness to shifting demand patterns across various locations.
- Safety stock: Maintaining safety stock helps you meet unexpectedly high demand, particularly during peak seasons. Having a buffer reduces the risk of stockouts and ensures continuous supply to customers.
- Seasonal inventory adjustments: Seasonal inventory adjustments adapt inventory levels to changing demand patterns. This enhances agility when responding to seasonal fluctuations and trends.
- Inventory forecasting: Inventory forecasting is a powerful tool for predicting demand and adjusting inventory levels accordingly. This enables proactive decision-making and planning for future demand.
Ready to enhance business resilience?
Fishbowl is here to help. Its comprehensive inventory management solution empowers you to anticipate disruptions, make proactive decisions, and keep your business running smoothly — even in the face of unexpected challenges.
With Fishbowl, you can easily track inventory levels and manage the supply chain. Plus, a seamless integration with QuickBooks streamlines accounting processes, enhancing accuracy and efficiency.
Don’t let disruptions derail your business. Book a demo with Fishbowl today.