Most Common Problems in Your Supply Chain and How to Fix Them
If you weren’t aware of the problems in your supply chain prior to the COVID-19 global pandemic, that’s probably no longer the case.
Across all industries, disruptions in the global supply chain have left procurement teams scrambling and companies reacting in uncoordinated and ineffective ways.
Here, we’ll look at some of the most common problems in your supply chain, with a few suggestions about how you can fix them.
Insufficient Supply Chain Mapping
One of the many painful lessons learned by organizations in the midst of the pandemic was that a lack of supply chain mapping made it difficult to know what was where and when.
In an article for Harvard Business Review, supply chain experts note that, “…a small minority of companies that invested in mapping their supply networks before the pandemic emerged better prepared. They have better visibility into the structure of their supply chains. Instead of scrambling at the last minute, they have a lot of information at their fingertips within minutes of a potential disruption. They know exactly which suppliers, sites, parts, and products are at risk, which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites.”
Although the authors acknowledge that thorough supply chain mapping can be an expensive and tedious affair, they underscore the fact that organizations willing to make that investment will come out ahead in the long run.
Lack of End-to-End Visibility
A close cousin of supply chain mapping, end-to-end visibility is another global supply chain need that can be quite a challenge.
However, it’s a critical goal to tackle, since lack of visibility can lead of all sorts of cause-and-effect issues and unanticipated logjams that lead to disruptions and impact a variety of mission-critical dynamics. Consider the following lack-of-visibility issues:
Lack of visibility into inventory management can lead to stock levels that either exceed or fail to meet the demand. This can lead to overspending on items that are already available and require additional storage space—or insufficient stock levels to meet customer needs.
Lack of visibility can also impact the ability to anticipate purchase and production needs—which may lead to haphazard predictions instead of relying on accurate data that helps to optimize cost and process efficiencies.
Lack of visibility might also mean lack of traceability—which is a critical factor in highly regulated sectors, and can also have a negative impact on customer relations and a company’s brand if there’s a problem that needs to be addressed.
Ineffective Warehouse Management
As a critical link in the supply chain, effective warehouse management is an essential component of organizational success.
However, according to warehouse management expert Tim Garcia, there are common challenges many companies face in this context, including:
Inventory accuracy: “Without an automated system, companies often don’t know what they have in stock, causing inaccuracies. Inadequate visibility can lead to excess/obsolete inventory buildup or unexpected shortages.”
Inventory location: “Without adequate insight into location, pickers take longer to find the items to ship, which slows the loading process and creates a backup in labor allocation and dock-door scheduling.”
Space utilization/warehouse layout: “If you don’t optimize storage systems, racking and pallet patterns, the amount of space necessary to house inventory increases. Inefficient warehouse layouts also cause unnecessary labor.”
Redundant processes: “Barcode technology, which is frequently found in today’s automated warehouse systems, eliminates multiple touches.”
Picking optimization: “With system-directed pick/put away, the routing is easily automated, reducing wear and tear on both your equipment and your labor force.”
Lack of Comprehensive Risk Management
Short-sighted risk management in the supply chain can lead to a reactive approach that requires the perpetual implementation of short-term solutions—rather than a proactive approach that incorporates a birds-eye view assessment of potential risks with metrics that inform mitigation.
A comprehensive approach to risk management is also needed to deal with the increased complexities that supply chain managers face. In an article for American Express, Rick Blasgen, president and CEO of the Council of Supply Chain Management Professionals, says the expansion of global supply chains into various parts of the world where political, economic, and other issues are factors may increase risk: “That makes us become risk managers as well. …It's risky to have products and raw materials coming from all over the world."
Achieving a comprehensive approach to risk management starts with a comprehensive assessment, as well as a willingness to create ownership of the whole chain so that risks along the chain can be addressed.
This should be combined with a commitment to align different elements of the chain with the end goal—as one supply chain expert describes: “In practical terms, this means a real transformation in how measurement systems are designed and implemented to ensure that there is full understanding of how the business interlinks. Individual incentives and success need to be aligned for the achievement of overarching goals, not purely functional excellence.”
Ineffective Use of Technology
In today’s complex world of global supply chain management (SCM), the effective use of technology solutions can provide a huge competitive advantage, since they can enhance operational efficiencies and help to boost the bottom line. Across multiple logistical modules—such as transportation, international freight, and warehousing—various technologies are essential for supply chain optimization.
However, some companies may struggle to use technology solutions effectively due to a variety of factors, including:
Siloed technology platforms—that disrupt the flow of information critical to efficient supply chain management. As noted in Supply Chain Management - Problems and Roadblocks, “Most multi-national companies find that their supply chain operations across the world are managed not on one application or a set of applications, but each location and country would have implemented either legacy systems or stand-alone systems to manage individual local logistics activities.”
Lack of technology solutions—that meet local, country-specific, and global requirements: “While the solution may work in one country with bigger volumes and size of supply chain network and warehouses, the same software may not be suitable to be implemented in a small country with one location.”
Cost of technology absorption—that smaller countries or regions may not be able to afford.
Technology infrastructure requirements—since what’s needed to support internet-based applications may not be available in more remote regions.
Lack of quality data—which can negatively affect supply chain management.
Rushing the launch of new technology systems—which can have a negative ripple effect along the supply chain if things don’t go well upon launch.
Some solutions for fixing these issues may include:
Adopting a technology platform that helps to overcome the challenges of using disparate legacy and stand-alone systems.
Seeking to understand the specific technology barriers that may be present within the country-specific regions and smaller locations you serve.
Ensuring the accuracy of the data that’s entered into the system. Using automation that’s enabled with technologies such as application programming interface (API) can help to improve data quality.
Obtaining an outside opinion about whether your company is ready to launch a new technology system, since there may be important factors that are being overlooked.
Every company faces common problems such as these when it comes to supply chain management. But the good news is that you don’t have to face them alone.
At CLN Worldwide, our management service coordinates the entire supply chain and solves transportation and regulatory challenges. We allow you to focus on your business.
www.clnusa.com email@example.com 704.756.6425