Once upon a time, supply chain management was easy. Today, businesses have to contend with global competition, product life cycle compression, and most importantly, rising customer power.

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Technology has allowed control to rapidly shift over into the hands of end consumers. People want what they desire, when and where they desire it. To fulfill these demands, business owners need to anticipate supply chain challenges and reinvent their supply chain into scalable and efficient infrastructures.

In essence, if your supply chain is weak, you’re out of the game.

The more you know about the common obstacles that plague supply chain models, the easier it will be to avoid them and remain competitive.

1. Long and risk-heavy lead times

The price to pay for seeking cheap, foreign labor is that you have to deal with extensive lead times and face the risks associated with long-distance shipping. A lot can happen in the 40 to 50 days you are waiting for your shipment to arrive. And once it’s in transit in the middle of the ocean, you can’t send it back.

Trouble at sea can double your expected delivery date with chances of losing the cargo, encountering labor strikes, or even getting robbed by pirates.

top supply chain challenges

It’s every business owner’s nightmare to disappoint customers and be put in a position where they have to explain why orders have been delayed. Even a tiny delay in your promised date of delivery can have heavy repercussions for your entire supply chain workflow.

2. Increasing complexity

Supply chain complexity continues to increase in a number of ways.

Firstly, competition and the need to satisfy customers’ price expectations have pushed companies to relocate manufacturing to countries with low labour costs. It has become the norm for businesses to manage complex, global networks of manufacturers, suppliers, distributors, transporters and other players across different time zones and locations.

Many companies also struggle with multichannel sales and fulfillment. Although eCommerce and mobile-enabled consumers are helping to increase revenues, it’s also raising the bar for operations and logistics management.

3. Excessive cost cutting measures

Choosing to implement a lean manufacturing or distribution model doesn’t necessarily mean that you should be saving at the cost of productivity or quality.

Overemphasizing cost cutting can be detrimental to your supply chain. For example, it can hinder your ability to quickly adjust to supply and demand shifts without incurring heavy losses.

Any deviation from the production plan could have catastrophic results for anything lower down the supply chain.

Therefore, it’s important that you bear in mind the flexibility you need to be responsive to changes in orders, demands and products. Cost cutting is at the top of every business owner’s mind today, but there is a fine balance between trimming the fat and cutting the muscle of your supply chain. Don’t skimp on what you need!

top supply chain challenges

4. Poor sales and inventory forecasting

Accurate sales and inventory forecasting is crucial to the success of any business, but it’s a step that many retailers and wholesalers alike overlook. Without proper forecasting, businesses are likely to fall prey to stock-outs or overstocked products, resulting in increased inventory holding costs or a poor customer experience.

Sales and inventory forecasting is especially useful for predicting seasonal fluctuations in demand, such as during the holiday period, when sales and inventory levels stray from the norm. During these periods, competition among businesses is at an all-time high, so providing an exceptional customer experience is paramount. By planning for sales and inventory, you’ll be able to give customers the products they want, when they want them.

By utilizing a sales and inventory forecasting template, you can turn historical sales data and other information into educated estimations about upcoming sales volumes, and in turn, how much stock you’ll need and when to order it to ensure you’re meeting customer demand.

Factors that should be considered to develop a solid and credible forecast include:

  • Predicted sales per channel (based on historical sales data, market research, etc.)
  • Product types and categories
  • Sales from new customers vs. repeat customers
  • How long you plan to sell each product
  • How long it takes from placing a purchase order to being ready to sell

From this information, you can accurately plan the inventory and resources needed to meet upcoming demand.

5. Little or no risk management strategy

Just when you think you’ve achieved supply chain efficiency, an unexpected ‘kink’ throws everything off course. Risk is inevitable, but it helps when you have a proactive plan in place. A reactive, knee jerk response can often cause more damage than the problem itself.

Having a solid risk management strategy can help you mitigate this risk. A well-planned strategy can help you minimize and control the impact that unexpected events can have on your supply chain, while maximizing the opportunities they can present.

While there are a lot of lessons to be learned from supply chain management best practices, your focus should be on familiarizing yourself with your own supply chain - and ensuring that it aligns with the rest of your business.

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