Challenges that Could Break your Supply Chain

May 11, 2016

You don’t have to be an expert to see the changes over the last decade in supply chain management. Changes that include cheaper manufacturing bases in Asia creating global supply chains to the advent of new technology such as cloud based systems and RFID’s.

With all this constant change occurring, supply chains have become more collaborative, more efficient, and more cost effective. However, there are still challenges that could break your supply chain if not managed.

The consumerism challengeConsumerism has stretched to the four corners of the globe, and as a result the world has become one big marketplace and needs one big supply chain to support it. For example, the online shopping world has become a very mature and competition-rich environment. The business to business world is no different with an ever increasing number of organizations doing business online and stretching their supply chains across the globe. Organizations that are not up to the challenge of global consumerism will be sadly left behind.

The sourcing challengeThe world is a constantly changing marketplace and being able to accurately measure the true cost of supplying products and services across this global market is a big challenge. More and more supply chain specialists are faced with complex sourcing issues, such as supply chain risk, increasing costs, global logistics, and community and sustainability all impacting their sourcing decisions.

The data challengeData isn’t the answer to your prayers, and it’s easy to get caught up in the vision that data is going to answer all your questions. But the reality is data is a misnomer. The real challenge is not in managing data, but in understanding what the data means. Data can give you visibility into your supply chain and assist in identifying areas for improvement.

The next shiny app challengeIt’s easy to get caught up in the next new and shiny app on the market, which promises to make your supply chain more intuitive and agile, but you should be aware of the risks. Good apps are tested rigorously and offer a high level of stability and must integrate into your existing IT systems. A good app can help significantly, but assess the risks first. Apps should never be seen as a replacement for your existing supply chain management systems.

The GFC challengeThe global financial crisis blind-sided many companies and generally made everyone more cautious. That cautious attitude will live on for decades despite early signs of recovery. The financial sector is beginning to lend money again, but with more scrutiny, making organizations search for other options when funding their supply chains. Subsequently, supply chain specialists are asking tougher questions of their suppliers.

The relationship challengePlanning for product demand has always been challenging. Your capacity to manage product demand is significantly dependent on your relationship with your customers and your suppliers. Customers unwilling to share their demand forecasting can make it even more challenging. Your supply chain managers should be spending as much time as possible with your customers. It must be a two way relationship; keeping customers and suppliers close and engaged will be the greatest challenge, but the most rewarding in the long term.