How to Reduce Supply Chain Risk

How to reduce supply chain risk

May 29, 2026
By Justin Robarge | Director of Trade Compliance

Container ships move about as fast as a decent amateur bicyclist. For a human moving around a city, that’s a great speed. For a ship carrying your supplies from around the world, that’s … slow.

To use the old fable, these ships are very much the tortoise who steadily moves toward the finish line. The hare in this analogy is air freight; it’s a speedier option, but the cost makes you think twice.

Opting for a lumbering pace does bring some advantages though. The reliability of knowing that your ship will arrive on time weeks in advance is the key to smooth operations. But when a disruption happens, there’s only so much extra speed a 1,000-foot-long ship can add on. And it’s unlikely to make up for the lost time.

That’s why supply chain disruptions are best handled like the turns on these massive ships: You’re going to want to get things figured out well in advance.

How to assess supply chain risk

Stronger supply chains are built through proactive risk identification. If you wait until a ship is sideways in a canal or the Strait of Hormuz is closed to start drafting your plan B, you’re too late. Being proactive is the key. You want to determine “What is a supply chain risk?” before it shows up.

Whoever owns risk identification on your team, have them look at underlying cost drivers and inflationary trends. On the logistics front, think about your ability to move inventory where you need it. Can something like a natural disaster or a port strike force you to stop production? Is there a weak point or potential bottleneck inherent in your supply chain strategy, such as a single source country or port of importation?

Get ahead of these threats by arming your people with both the right tools and with subject matter experts you trust.

Whether you choose to rely on third parties or have your own teams that you invest in is a business decision. And a lot of the time it's a mix of both of those. But the goal is always to be able to identify potential risks and provide assessments of events that haven't occurred.

How to mitigate supply chain risk

If risk identification is step one, step two is all about building your contingency plan. When you find a weak point in your supply chain, that’s the time to figure out how to mitigate the risk. This can be done either proactively or reactively, and sometimes you need to do a little of both.

Risk mitigation isn’t just a “break glass in case of emergency” situation. It's anticipating an event based on what you've identified as your risk. You’re basically asking, “How do we put something in place now so that if an event does come into play, we're already in a better spot?”

Actions you (or your supplier) can take

Source from multiple countries so a regional event doesn't stop your production.
Bring cargo in through the East and West Coast of North America to build in redundancy.
Have safety stock that allows you to weather a storm (in a figurative and/or literal sense) for a certain amount of time.

This isn't a one-size-fits-all plan. Supply chain risk mitigation is dynamic, it's constantly changing, and it should be tailored to your specific needs, depending on the location, part type, risk tolerance, etc.

Long story short: If you're not planning for it, you're allowing it.

How to manage supply chain risk

Based on your approach to supply chain risk management, you’ll take one of these two different paths. First, if you’re handling a lot of things in-house, you want to focus on having accurate data. Then, you want to strengthen your team, which can include training, upgrading their tools, and even additional headcount.

If you aren’t keen to take on this task, you want to find others who can do it for you.

As a Fastenal employee, I know I’m biased, but I feel we do a good job of looking at the potential supply chain risks and then continually adjusting.

Because having good visibility is so key, we talk with customers about demand to make sure we keep things stocked. Are you expecting a huge spike in production on a particular OEM line? Sounds good. We’ll adjust our inventory levels at that time, so we don’t burn through our safety stock faster than anticipated.

The goal is to have a dynamic strategy. This isn’t an area where you can “set it and forget it,” because it'll be obsolete after 6 to 12 months. That’s why our contingency plans are living documents. We even go so far as to test and challenge them.

During these supply chain continuity exercises, we bring together purchasing, logistics, inventory, sourcing, etc. Then, all these teams face a hypothetical crisis. What if there's a cyberattack? A natural disaster? We stress test these unlikely but detrimental events, learn from them, and improve our plans.

The takeaway

COVID. Ukraine. Port strikes. Tariffs. Iran. Everything comes down to asking: What are the main supply chain risks that we face? If you can answer that, you can create mitigation strategies.

And again, you cannot treat this type of planning as a one-time event. This isn’t an annual exercise. It's a constant conversation. You can scale up the level of conversation based on what the market's doing. There are periods of quiet and periods of intense noise. That’s the way it is. Just adapt and make sure you're not static.

Look for ways to be agile. You want to be constantly responding and overhauling your process as needed. It’s normal and necessary to be incrementally making your plan better.