The Supply Chain Today: Challenges and Solutions

Supply Chain Today

If you are in the Supply chain business, you will find this article very helpful. As a company that has supported the supply chain business for over 20 years, we have a bird’s eye view on the industry. This article is very important because it shades light on challenges facing the supply chain industry that players may not be aware of yet. What’s more amazing though is that we also give solutions to those challenges. That way, you are able to tackle the problem before it affects your business.

Most common problems facing the supply chain business

No vertical market appears to be immune to the hardships and challenges resulting from the unprecedented uncertainty and volatility of today’s geopolitical strife, climate disasters, and global pandemics. Which makes it even that much more challenging for organizations to try to meet consumer preferences and requirements that are always changing.

All of this uncertainty underscores the importance for organizations to focus on optimizing all facets of their supply chain costs—including cost-to-source, cost-to-procure, cost-to-manufacture, logistics, and handing. Supply chain optimization must also factor in the direct labor that drives
supply chain activities in manufacturing, distribution, and retail.

Total cost has never been more critical to understand and control—regardless of an organization’s industry or sector. Optimizing the supply chain means making critical decisions about many key factors. Even just managing the day-to-day workings of a supply chain typically involves having to weigh options and making choices. Decisions are best made when they’re based on accurate and up-to-date information.

Conveniently, many organizations have access (or at least the possibility of access) to lots of data that’s captured throughout the supply chain. The challenge is figuring out how to leverage all of that data to drive actionable insights.

Global uncertainty or not, many organizations continue to struggle with supply chain visibility and traceability—made even more difficult when organizations must contend with internal data trapped in functional silos, along with a lack of transparency with their trading partners. As a result,
many organizations recognize the need to shift to collaborative business ecosystems, but struggle with where to start and how to implement this level of collaboration effectively and efficiently. All of these challenges from across the supply chain reiterate the need for supply chains to be more agile and resilient. When that happens, organizations can respond appropriately when disruptions occur, and can better adapt for future business models that may emerge as a result.

Challenges impacting the supply chain

Many of today’s supply chains are struggling in key areas that have a profound impact on both customer satisfaction and profitability. These challenges include:

  • Late deliveries to customers, which can result in a diminished customer experience and perhaps even penalties
  • Stock outs or empty shelves, which can cause customers to search for products from other sources or even substitute with competitors’ products
  • Long lead times, which can result in lost sales when a competitor can fulfill a need in more timely fashion
  • Excess costs due to expedites, which may force organizations to use a more expensive carrier or even change to a more expensive mode (such as shifting ocean to air transport)

To address these challenges, many organizations increase their inventory in order to try to hedge against uncertainty. Unfortunately, this also increases expenses and often leads to later discounts—or even scrapped, obsolete, or damaged supply.

Many supply chain professionals spend significant amounts of time mining data, building huge spreadsheets, making many phone calls, and responding to what feels like never-ending email chains to chase down orders, reschedule production, and more because they don’t have the requested materials. This often creates a need to expedite orders to customers because there’s an inventory shortage or backlog. Much of this “extra” work is because the supply chain professionals don’t have the right tools or processes. Ultimately, this can result in missed sales opportunities and increased costs.

The Solution: Best-in-class supply chains

Our own research and testing with customers, partners, and analysts provide a clear view of what makes best-in-class supply chains work. The primary goal of a best-in-class supply chain typically involves maximizing service levels, while optimizing costs and working capital. The key to unlocking improvements in these areas is improving supply chain visibility. Visibility breaks down barriers and creates connections that enable
collaboration that drives agility, velocity, and resiliency across a supply chain ecosystem.

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