The scale of the impact from Covid 19 eclipses most supply chain challenges seen before! Responding to this has highlighted the need to adopt agile ways of working to cope with uncertainty. Supply chain leaders have had to continuously assess, optimise and monitor their supply chains.
What Are the Main Supply Chain Challenges?
Although the pandemic has been a catalyst for many disruptions in global supply chains, the actual cause may lay behind many years of inadequate supply chain management. Here are some of the biggest supply chain challenges in supply chain management today:
- Difficult demand forecasting. Due to unexpected challenges and fundamental changes to customer behaviour, forecasting has become more complex. Demand for certain items decreased, while demand for other goods increased. For example, the need for home office products skyrocketed as companies shifted to remote work and the need for personal protective equipment (PPE) surged globally. As a result of this forecasting based on data over the last 2 years is unreliable.
- Material scarcity and energy shortages. There has been a huge rise in consumer demand. Suppliers and companies have been struggling to meet this demand. For example, in the construction sector there have been dwindling supplies of key building materials such as roof tiles, cement and steel. Due to the shortages and lengthening lead times prices have soared creating unexpected extra costs.
- Driver shortages and staff shortages There is a shortage of more than 100,000 drivers in the UK, out of a pre-pandemic total of about 600,000, according to a survey of Road Haulage Association member estimates.
- Port congestions. Throughout 2020 and 2021, there have been historic wait times for ships headed into ports across the world. In October 2021, more than 50 container ships amassed in US waiting to unload cargo from China. When a ship arrives at a gridlocked port and cannot load (or unload) congestion and delays occur resulting in increased lead times which is affecting domestic supply chains
- Increased freight costs. As a result of the increased need for raw materials and manufactured consumer products, there has been an increase in import demand for these materials. And, because the demand was far higher than expected, there was limited shipping capacity, resulting in a price increase.
- The limited granularity and availability of data and information. It’s vital that organisations can map out their supply chains to identify vulnerabilities and weaknesses. With this information, businesses will be able to make better-informed decisions as soon as lower-level supplies are threatened.
- Keeping liquidity in your business. Businesses must be able to protect themselves with flexible access to capital. Flexible lines of credit can be used to stock up on evergreen or perennial items in high demand for priority manufacturing and shipping.
- Slowed digital transformation, cyber-attacks and the inability to go paperless. Many organisations still work with a combination of manual and digital systems. These systems can create information silos, where decision-makers cannot get all the necessary information to make the right choices. Companies must work towards incorporating technological advancements into their supply chain.
- Diversifying sources in your supply chain strategy. There is a need to have numerous supplier relationships as it enhances a business’s ability to become more flexible in a constantly changing environment.
- Supply chain volatility creating problems throughout the supply chain. Businesses must now learn to navigate the volatility of supply chains to decrease several issues that have arisen.
Getting to Grips with Today’s Supply Chain Challenges
Organisations can combat these challenges by mapping out the priorities in their supply chain. Businesses must navigate the financial and operational challenges of coronavirus while rapidly addressing the needs of their people, customers and suppliers. By taking the right actions, supply chain leaders can turn high levels of complexity and supply chain disruption into meaningful change.
As businesses respond to both the immediate impacts of the pandemic and prepare for what comes next, a continuous cycle of risk mobilizing, sensing, analysis, configuration, and operation will help to optimize results and mitigate risks:
- Put people and the workforce first and support their health and new ways of working.
- Use available data analytics to improve supply chain visibility and transparency.
- Carefully analyse the demand for goods and define micro-segments with inventory management strategies.
- Build a team to undertake multiple interventions and orchestrate responses effectively.
- Evaluate different supply chain scenarios, run simulations to predict when and where risks can occur and get insights that will teach valuable lessons for operational metric optimisation for problem-solving.
- Evolve digitally to unlock data and better manage information and communication.
- Continuously re-evaluate and update supply chain operational models to create a resilient supply chain.
Creating supply chain strategies and managing priorities is essential to the health of supply networks. It’s easier to resolve and mitigate risk in supply chains with adequate tools and approaches.
Bisham specialises in working with businesses in developing your strategy and tactics to mitigate these supply chain issues.
Contact us on 01628 487000 for more information on how we can help you gain supply chain resilience or email email@example.com