How to manage supply chain risk
March 15, 2023
By Justin Robarge | Director of Trade Compliance
By Justin Robarge | Director of Trade Compliance
Risk has always been present in supply chains. But tariffs, a pandemic, and subsequent recovery have brought far more attention to the ways things can go astray. The question now is the same as it always was, but has taken on new importance:
How can we prepare for the risks that are inherent in a supply chain? Common options
How does Fastenal navigate global freight challenges?We have a diversified strategy to move cargo globally, balancing out low costs from carrier direct contracts with the flexibility to expedite cargo on the spot market to avoid bottlenecks and congestion issues.
Our prevailing focus has been on getting goods delivered on time to avoid costly stock-outs and to minimize the need for air freight. In 2021, Fastenal shipped almost 8,000 containers to North America from 46 different foreign ports. How does Fastenal handle risks?Let’s look specifically at what is done to manage political and regulatory supply chain risk. This will be inclusive of sanctions, trade wars, and evolving regulatory regimes.
To start, we’ve invested heavily in strong trade compliance and commodity intelligence teams. These teams are designed to provide forward-looking insight into specific governmental policy changes and subsequent repercussions that will propagate through the industrial landscape. This focus on correlation, causality, and current events gives Fastenal a strategic advantage in managing both the challenges – and opportunities – that may arise. We are also investing in trade automation tools. For example, advanced denied party screening software allows us to quickly adapt to evolving sanctions. How does Fastenal expect to offset future and unforeseen supply chain risks?We’ve aggressively worked to diversify our global supply chain base across a range of countries, regions, and continents. This helps mitigate the potential risk that may occur from any given event. Also, a large percentage of our core offering is multi-sourced to provide further redundancy.
Our supplier onboarding and auditing process is designed to safeguard our supply chain by identifying potential risks, such as forced labor concerns, well in advance so we can avoid and anticipate challenges by only partnering with best-in-class suppliers. Factors in Fastenal's favor
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