Gaps in Supply Chain Management

Jan 28, 2016

Effective supply chain management promises to transform an organization’s economic future. However, one of the principal barriers to the realization of these benefits are gaps in the supply chain. In many instances there will be a heavy reliance on contractors and other supporting vendors, which can create numerous issues. These issues occur particularly where ownership of your supply chain elements are fragmented and/or traverses across differing geographic and regulatory jurisdictions.

Issues that can arise in supply chains

Supply chains can be very complex and interlinked; an issue in one element can affect everything else. When interlinked elements are controlled by outside vendors with limited control the affects can be exacerbated. There are many varying issues that can arise in supply chains; however they all have one common element- poorly coordinated vendor management, which includes: 

- Inefficient operation and poor coordination between the various vendors of the supply chain;

- Contractual gaps between key supply chain participants, such as between varying transport providers, can result in critical product or service delivery delays;

- Lack of sharing of certain information, between the various vendors, such as service scheduling not providing availability of delivery vehicles on any given day;

- Lack of accountability among the various vendors, which leads to the vendors only considering their own commercial goals and not the goals of the overall supply chain, silo thinking;

- Failure of contractors to perform the output they were contracted for, either delays in delivery or poor quality of service leading to unnecessary costs; and

- Downtime caused by incidents, litigation, fines, breaches in contract, or industrial action.

However major or minor each issue may appear on their own, their effect causes a flow-through to other elements in the supply chain or can place other elements in the supply chain out-of-sequence, leading to inefficiencies and poorly coordinated vendor management.

The implementation of a quality vendor management system can assist in identifying and eliminating the gaps mentioned in this article. Vendor management systems provide a portal either online or standalone that gives you the ability to assess and verify your vendors risk against set criteria such as health and safety, financial standing, skills capability, insurances, and security and can provide systems for communication and cooperation between vendors.

In essence, the key goal of vendor management is to achieve an environment in which your supply chain operates efficiently and cohesively, so that your product or service is delivered to market on-time, of the highest quality, and in a safe manner that will minimize returns and refunds.