Major Supply Chain Challenges and How They’re Affecting Everyone
Supply chain managers must make plans to keep things running well since the contemporary supply chain must change to meet new needs and supply chain issues. Significant supply chain challenges are created across the network because of a mix of rising customer demands, expanded market opportunities, complicated international issues, and other elements.
The process of supply chain management has many facets, several stakeholders, and numerous moving pieces. New technology attempts to improve supply chain efficiency, yet purchasing the incorrect technology further complicates production while impeding profits, leading to supply chain challenges.
The following are 2022’s biggest supply chain challenges faced by businesses from all over the globe.
- Limited Resources –
Due to a sudden increase in consumer demand unlike anything before, there has been concern about insufficient inputs ever since the epidemic started. Even now, despite the restricted supply of many components and materials, suppliers and merchants alike are battling to satisfy this demand. Everything from foam shortages for furniture makers to bike manufacturers losing payment conditions because component suppliers are at capacity.
In fact, a recent survey conducted by the Institute for Supply Management (ISM) revealed “record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices, and difficulties in transporting products across industries.”
Given these scarce inputs, the brand’s ability to sustain growth relies heavily on working capital to survive this downtime and stand up for the peak season.
- Unfavorable Demand Predictions –
In the midst of a global pandemic, demand forecasting has raised the bar for supply chain management at many businesses. For a large number of retailers and providers of consumer goods/services, the start of COVID-19 virtually destroyed the projections, leaving them without a reference as to how much inventory to stock or make at any one time.
Therefore, the difficulty has arisen from attempting to enhance client demand estimates while, in many cases, having to rely on intuition rather than data-driven study. Supply chain managers are urged in this scenario to set aside prejudice, seek out new data sets for forecast models, and continuously hone their findings for the highest level of accuracy to overcome supply chain challenges.
- Changing Consumer Behavior –
The pandemic has also significantly altered consumer attitudes and habits, lowering the bar for delivery times, and raising the standards for a satisfying customer experience, for example. The difficulty lies in building a flexible supply chain that can use automation to optimize fulfillment and easily meet increased demand.
- Digital Transformation –
Digital transformation and IoT can be mixed blessings for supply chain operations. Having said that, several technologies, such as AI, drones and robots, electric vehicles, and on-demand delivery, have the potential to improve how we approach the conventional supply chain.
The difficulty lies in deploying these solutions across a company’s current supply chain challenges and activities, even while their long-term goal is to make e-commerce procedures more efficient and cost-effective. Implementing these technologies requires effort and organizational reconfiguration, especially when dealing with several warehouses or omnichannel selling. However, if supply networks want to remain competitive, they must constantly change.
- Reorganizing –
There is no debate that restructuring is having a significant impact on contemporary retail brands. This approach may involve reshoring, switching suppliers, or negotiating agreements with all new carriers, among other options. The difficulty with restructuring is determining when a change is necessary and how to implement it as smoothly as feasible.
For instance, moving suppliers must be properly planned out to prevent inventory shortages throughout the changeover. In order to avoid a stockout (and lost sales) should demand increase while you’re awaiting replenishment or for the contracts to be finalized, you will need to maintain a large amount of safety stock on hand.
To improve their bottom line and keep their client base during the past few years, businesses of all sizes have had to rethink their operating tactics. However, in the midst of the world crisis and supply/demand issues, brands are in some way strengthening their resistance to upcoming shocks and mending their fault lines through SCM transformation to avoid supply chain challenges disrupting the business in the future.
Find out the Advantages of Integrated Supply Chain Management
–Chandrasekar Swaminathan