When it comes to breaking the term “supply chain” it may be easy for most of us to understand that it involves all the processes related to the production and distribution of a certain element. It includes inventory, logistics management, transportation, packaging and even safety of the products we want to deliver them to our final customer. In other words, supply chains are crucial to bringing products to their final destination.
Along the supply chain, there are many things that can go wrong or put products in danger. Managing supply chains can be rather exhausting if companies don’t count with the need resources, experience, and technology, especially when the market has become so demanding nowadays. It is very important to plan ahead, to forecast what may become an issue and prevent any possible negative situation, learning how to properly react when something doesn’t work as it was planned.
Shippers in any company should always know how to identify key concepts that may affect supply chain management. This way, they will know how to be prepared and react in case of emergency. Let’s keep in mind that an emergency doesn’t necessarily mean that we will need to deal with a natural disaster. An emergency can be as difficult as having to deal with an upset customer asking for a refund.
According to David Kiger, some of the key challenges Supply Chain Management has to face are the following:
Visibility: The term “visibility” refers to the capacity everyone involved in the shipping process has to track where the products in transit are. This means, that both the company and the customer should be able to locate a specific item from the manufacturer to its final destination.
Visibility is one of the most challenging concepts that need to be kept in mind when managing a supply chain since it is always valuable for customers to know that the item they bought is fine. Also, it helps manufacturers and shippers control their inventory and have a more accurate report of the current state of the company.
Companies that lack an end-to-end visibility are affected by numerous challenges, including the urge to create a cost-effective supply chain that included the movement of products, relevant information related to key dates, transportation routes and accommodation of goods in distribution centers.
Traceability: This term is challenging for manufacturers who are often unaware of the place where the raw material they use comes from. Traceability refers to the ability to trace materials from their point of origin to the place where they are transformed and finish products are stored.
Traceability can be challenging, not only because it is difficult to know if the source of our raw materials is legitimate, but because supplies often move back and forth along the supply chain before they become the final product, and this makes it really difficult for companies to quickly trace materials and know their condition and location.
Costs and Complexity: Sometimes when companies are trying to reduce costs, they hire third parties. This may seem like a good idea when we have tight budgets, but it creates a complex network of service suppliers that are often difficult to track or don’t count with the needed visibility. Having a complex web of third parties contributes to aggravate processes involved with the supply chain.
Even though having a complex network of suppliers can be challenging, it is important to notice that considering a cost reduction is a vital matter for every company. Cutting costs is usually necessary to be competitive in a market that every day becomes more demanding. Negotiating with suppliers and planning cost-efficient strategies improves the supply chain process and helps reducing costs. However, no matter how important it is to reduce costs, we cannot neglect performance along the supply chain.
Sustainability: For companies, it is challenging to balance the sourcing process while keeping a cost- efficient operation and giving customers what they ask for in the time they want it. Being able to stand in a middle ground in terms of sustainability is one of the best ways to ensure permanence in the market as well as operations that control waste and environmental risk.
Sustainability is essential to keep a profitable business that aims to last in time. It allows companies to be more competitive and innovative thanks to the way they face challenges to be more aware and respectful of the environment and their workforce needs.
Technology: Technology is a great tool that can mark a significant difference in the way supply chains operate. Using technology or nanotechnology improves visibility, allows to have a better inventory control and performance. However, it can create major difficulties when it stops working properly or people don’t know how to handle it.
Relying heavily on technology can be challenging, especially when all flows or information are controlled through it and it experiences a breakdown or is attacked by external threats. Backing up information is a great alternative when we are trying to protect our company from a permanent damage. Also, training our workforce along the supply chain is a good way to reduce operational risks.
To read more about other supply chain management challenges, you can click here.