4 common supply chain problems and how to overcome them
For those working in manufacturing, global pressures seem to offer daily reminders of supply chain disruption and the need to adopt more efficient ways of dealing with increased volatility.
Brexit, COVID-19 and now geopolitical conflicts have all contributed to an unstable marketplace where supply chains can be disrupted with minimal warning.
With this in mind, the need for agility, lean processes and solid decision-making have become more important in business than ever before.
Here are five of the most common supply chain logistics problems and how to overcome them.
Scarcity of raw materials
One of the biggest concerns for manufacturers in recent years has been a great scarcity of raw materials and the knock on effects of increased costs.
When the pandemic hit, manufacturers were forced to respond to demand that considerably exceeded previous levels.
The shock of this external pressure has left companies and their suppliers scrambling to meet demand well into 2022 – and this is likely to continue for the foreseeable future.
How can a company negotiate such a challenge? One way is through working capital that can cushion the blow when materials become scarce and costs increase.
Another method is to invest in demand forecasting and using data analytics to predict when demand is going to be high. Inventory levels can be adjusted accordingly to ensure stock is always available without parts taking up shelf space and depreciating in value.
A modern ERP system like Epicor Kinetic ERP should help considerably with this.
Growing shipping costs
It should come as no surprise that the rapid growth in E-commerce during the pandemic and then in recent months has seen a greater need for container shipping across the globe.
This has resulted in more pressure on shipping capacity, as shipping has struggled to keep up with demand.
Unsurprisingly, shipping costs have exploded as a result, with freight rates from China to the US doubling since the start of the pandemic.
Customer expectations and supply chain problems
One of the most interesting and challenging developments to hit supply chains in recent years has been a shift in customer expectations.
Much of this is a result of E-commerce and the transformation of the customer experience online.
Now it is possible to view a product and have it delivered to your door the following day – even if that product was produced in China and arrived in an Amazon storehouse just the day before.
The increase in customer expectations however is being challenged by geopolitical conflict, resource scarcity and economic fluctuations – meaning the recent golden days of immediate satisfaction is likely to be challenged.
In order to meet the challenge head-on, businesses will need to be smarter, leaner and more adaptable to stay ahead of the competition.
ERP and the digital revolution
The advent of new technologies offers an antidote to the challenges listed already in this article. Artificial intelligence, data analysis and smart devices and allow for reductions in waste and leaner processes that can reduce the complexity of supply chains and help to negotiate challenges.
The difficulty, however, lies in implementing these new systems without disrupting your supply chains in the short term.
Companies without specialist IT support or an experienced project team are increasingly looking for assistance in making sure their ERP system is delivered on time and on budget but also in a manner that fits with current business processes or seeks to improve them.
Interested in improving your supply chain management? We have the solution. Get in touch with a CBO consultant today and start your ERP journey here.