5 Most Common Supply Chain Challenges and How to Solve Them

Supply Chain Challenges February 05, 2021

Hanh Truong

Writer

Various internal and external events can impact the flow of a supply chain. Most recently, businesses have been experiencing supply chain challenges due to the coronavirus outbreak. Many modern companies that have suppliers from across the globe and country have had to pause production or slow down to prevent the spread of the virus.

As organizations are taking steps to reestablish their workflow and pick up their operations, business owners should consider the most common supply chain challenges and prepare strategies to remedy them. This will help strengthen their ability to mitigate supply chain risks and ensure they can remain profitable in the future.

5 Common Supply Chain Challenges

A supply chain can be impacted by a variety of factors, such as fluctuating economic conditions and shifting market demands.

There are 5 common challenges businesses may face.

1. Cost Control

Expenses related to energy, fuel, freight, and raw materials often change due to weather and limited supplies. Additionally, advancing technology, increased labor taxes, and newly imposed government regulations can cause a business's operating costs to multiply.

These surges in costs can negatively impact a company's budgets and if it is ineffectively controlled, operations may have to pause so that management can re-examine their spending.

In order to solve rising costs, executives can implement inventory management software. These cloud-based tools provide real-time reports regarding spending and waste, which management can use to make informed decisions about their procurement and budgets.

2. Customer Service

Customers have their own preferences and needs. Additionally, shoppers will typically want specific products and services at a specified time. However, satisfying these unique demands and tracking ever-evolving market trends can be difficult.

Organizations can fully understand their customer's expectations by gaining visibility into client and sales data. These metrics can show managers who their shoppers are and what they like to buy.

It is also helpful to communicate directly to customers, either in-store, on social media, or through websites. With consumer feedback, businesses can have a better understanding of how shoppers like their brand and what adjustments can be made to improve customer service.

3. Supplier Relationship Management

Unreliable suppliers can cause operations to slow down and could potentially lead to loss of sales. For example, if a vendor does not adhere to their specified delivery schedules and is either providing goods too late or too early, retailers will have fluctuating inventory levels and will be unable to effectively meet consumer demand.

Therefore, companies need to partner with suppliers that are dependable and who can meet delivery expectations.

Fostering a strong and transparent supplier relationship is possible with the implementation of communication and collaboration. By having a clear understanding of each party's expectations, businesses and their suppliers can work together effectively and achieve shared goals.

Additionally, a strong communication system will ensure that each partner is aware and updated about a product's movement in the supply chain.

4. Labor Force

A supply chain can move efficiently with the help of qualified and productive employees. If a business has staff members that have all the specific skillsets required for their role, daily tasks can be done correctly and in a timely manner.

For example, warehouse employees should be able to lift heavy objects and have an updated forklift license, as well as excellent organizational and time management skills. These qualities will minimize delays to the warehouse workflow and ensure that goods are properly handled.

Organizations can cultivate a skilled and competent labor force by conducting comprehensive onboarding and training for all employees. Creating a thorough training program will enable staff to strengthen their existing skills and be knowledgeable about company standards. It will also help improve employee performance in the long run because they will be well versed in their responsibilities.

5. Amount of Suppliers

While having a single supplier may be more cost-efficient, many organizations are more vulnerable if their provider has a shortage or is unable to produce goods at a given period. This can cause a delay to the company's supply chain and can disrupt their ability to satisfy their consumer's demand.

Businesses can mitigate this risk by curating a list of back-up suppliers who can provide the same type of good in the same quality and quantity. It is recommended that managers foster a healthy relationship with their back-up suppliers to ensure that they are able to deliver the products promptly in case of an emergency.

Organizations should also have suppliers from various locations or regions. This is especially helpful in the case that a supplier from a specific area is unable to ship their goods to the retailer due to weather conditions or travel restrictions.

Supply chain challenges may occur unexpectedly; therefore, businesses must understand the most common risks to their product flow and strategize best practices to soften the impact of any incoming disruptions.