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Supply chain

Supply Chain’s Biggest Obstacles and Their Solutions

Most companies now prioritize supply chain concerns thanks to integrative management, responsiveness, financial maturity, and globalization enabled by exploding information technology. While businesses are understandably enthusiastic about the possibilities of supply chain management, the difficult issues and risks that it entails are often overlooked.

The effectiveness of supply chain management relies on the profession’s willingness to abandon long-standing functional methods in favor of those that place a premium on integrated process efficiency. To accommodate such a change in behavior, businesses must adopt fresh methods of internal integration and supply chain management. While working toward the goal of an integrated supply chain, it is important to think through these implementation challenges. So, let’s take a quick look.

Challenges Faced By Supply Chain

The following is a list of the most significant difficulties in supply chain management that product-based enterprises throughout the world currently face.

1. Leadership

The benefits of a supply chain can only be realized when it is run as a controlled operation. Leadership is essential for this kind of integrated management. In a possible supply chain relationship, the company with the most power is the one that can take the reins. The ability of other companies in the supply chain to identify a given company as the collaborative leader is just as crucial. Power imbalances are common in supply chains that aim to link makers of branded consumer goods with a retailer who enjoys strong customer loyalty. 

In an ideal supply chain, the question of which company takes the lead and how well other companies can work together under that company’s direction is of paramount importance. Who stands to gain or lose the most from the supply chain interaction is the central focus of the risks involved. A trucking company’s stakes in the supply chain are obviously far lower than those of a retailer’s or wholesaler’s.

2. Rising Transport Costs

Even though it wasn’t anticipated at first, container transportation has become increasingly important throughout this pandemic. Increased import demand for raw materials and finished consumer goods can be attributed to the rise in e-commerce sales that global lockdown measures have prompted (a large percentage of which are moved in shipping containers). The demand was significantly higher than anyone had anticipated, and the supply of empty or available containers was severely lacking. This scarcity has resulted in the usual enormous price increase.

3. Confidentiality

Companies in one area of a supply chain almost often have a hand in other, closely linked enterprises. The most usual scenario, however, is for businesses to participate in the supply chains of their immediate competitors. If the promise of interconnected supply chains is to be fulfilled, collaborative ventures must be developed, promoted, and sustained within this network of competing contacts. Businesses that manage competitive supply chains must establish procedures to promote loyalty and maintain confidentiality. The term “partitioning” is used to describe this type of organizational structure. 

To meet the requirements of certain partnerships, partitioning necessitates the creation of unique internal structures and specialized networks of information sharing. Partitioning is typically handled by specialized customer service teams in environments where there is an emphasis on manufacturer-branded products and partnerships with merchants. Separate departments can be set up to handle individual vendors if that’s what it takes to bring a new product to market.

4. Congestion in the Ports

Port congestion remains one of the world’s major supply chain issues, which has been exacerbated by the pandemic. Shippers, carriers, and port authorities have yet to settle on a workable solution. Congestion occurs when a vessel arrives at a port but cannot load or unload its cargo because the port is already at capacity.

Normal loading and unloading procedures proceed without incident. As a result of the epidemic, however, there has been a significant disruption in the availability of workers and in social interactions. Many businesses are unable to get their products out the door on time because of the congestion, which causes carriers to fall behind on their delivery schedules.

5. Transition to the Digital Age

Digital transformation and the Internet of Things present both opportunities and challenges for supply chain management. However, some emerging technologies, including artificial intelligence, drones and robots, electric cars, and on-demand delivery, have the potential to revolutionize the way we approach the conventional supply chain. However, the difficulty lies in incorporating these systems/services throughout an organization’s current supply chain activities, even though their ultimate goal is to make ecommerce procedures more efficient and cost-effective. Implementing these technologies requires effort and organizational reconfiguration, especially when dealing with several warehouses or omnichannel selling. However, supply chains must undergo constant change if they are to remain competitive.

6. Restructuring

Reorganization is unquestionably creating huge ripples among today’s retail brands.  This can take numerous forms, such as reshoring, switching suppliers, or switching to a new set of carriers. When it comes to reorganizing, the tough part is figuring out when it’s time for a shift and how to make that shift as painless as possible for everyone involved. To avoid running out of stock at the time you’re transferring suppliers, for instance, meticulous planning is required. 

In order to avoid a stockout (and potential missed sales) during times of high demand while waiting for replenishment or the finalization of contracts, you will need to retain a sizable buffer of inventory on hand. The same holds true if your business is reshoring. In case the transfer takes longer than expected, you must ensure that you have sufficient amounts of safety stock on hand.

Strategies for Resolving Problems in Supply Chain

As you can see, businesses face some unusual supply chain problems on a regular basis. The good news is there are many approaches to minimizing the impact of serious problems and preventing future stockouts. Lecke took a quick look.

1. Maintain Business Liquidity

Guarantee the success of your business by giving yourself a variety of financing options. After all, having available cash is usually the deciding factor between being able to meet demand and running out of supply. A flexible line of credit that can be utilized to stock up on evergreen or perennial commodities in high demand and pay for priority manufacturing/shipping is a good idea in light of the projected sharp ebbs and flows of inventory over the next few months.

2. Diversify Supply Chain Sourcing

Increase variety and availability in your supply chain by expanding your sourcing options. Having a wide network of suppliers to draw from makes it easier to respond quickly to shifts in the market. In many cases, a company’s success depends on its ability to diversify its supply chain in order to find the commodities and materials it needs while still maintaining or increasing earnings, client base, and rate of innovation.

3. Use Freight Forwarder

Working with a freight forwarder or multiple freight forwarders helps simplify the process of sending and monitoring deliveries. Freight forwarders are responsible for getting goods from A to B, but they can also set up the entire shipment for their clients and help them get the best deal possible. Working with a freight forwarder is beneficial for retailers because of the forwarder’s expertise in the supply chain and agility in responding to problems as they arise. Additionally, freight forwarders can aggregate shipments from numerous smaller merchants to negotiate at scale.

4. Improve Demand Forecasting

Using automations to compute these metrics on your behalf is the most reliable method to enhance forecasting. In order to avoid stockouts and surpluses, online shops must strike a balance between their inventory levels, warehousing expenses, and client demand. Shop owners can confidently stock up on products in anticipation of future demand or in response to an analysis of past sales with the help of automatic inventory alerts, forecasting tools, and available funds. Forecasting as a top priority can also help expedite stock takes and cut down on unnecessary overhead costs.

Wrapping Up

Supply chains, both international and domestic, are interconnected in complex ways. A single disruption can cause a cascade of problems throughout the entire process. Manufacturers, brands, and retailers can better adapt to the difficulties of the supply chain by gaining a deeper understanding of the problems and their solutions. Even yet, the supply chain difficulties can be overcome by putting into practice the aforementioned solutions. However, I-Way logistics is here to assist you if you still require assistance; we provide a variety of services to help you deal with supply chain issues. Get in touch with us today to learn more about how our services and products might benefit your business.

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