Top 7 Supply Chain Management Challenges

supply chain management challenges

Supply chain management is a colossal industry with a lot of potential in the future. However, the weight of providing good services, keeping up with the latest technology, and maintaining customer satisfaction has posed some challenges to the supply chain industry over the years. 

Considering how difficult it is for businesses to meet rising customer expectations while keeping costs under control, supply chain management plays a significant role in the current competitive environment. The following are the most critical supply chain challenges for businesses.

1. Risk Management

Supply chain management comes with unavoidable risks that can cause disruptions like delays, consumer dissatisfaction, and cost increases. These risks are often caused by socio-economic conditions, changes in the global stock market, and political schemes. Some of the supply chain risks are manufacturing financial, legal, environmental, and cyber risks. Managing these risks is an essential supply chain process that needs to be done effectively. Not being able to recognize and manage the risks in the supply chain is a risk in and of itself. Failure to effectively mitigate risks can lead to intangible consequences in the supply chain. 

2. Managing Customer Expectations

Consumer behavior is unpredictable, so the industry has to brace itself for the worst-case scenarios. Every company wants its supply chain to be customer-centric. As a result, it has to keep up with consumers’ rising expectations every day. Managing consumer satisfaction with changing customer expectations and behaviors while making significant changes to the supply chain system is becoming increasingly challenging. Factors like delivery delays, damaged products in transit, and other mishaps can cause dissatisfaction among customers.

Many consumers are now opting for sustainability, which leads to changes in material sourcing and finding more sustainable shipping options. These changes can turn out to be cost-heavy for the SCM industry. 

3. Fluctuating Prices

Price fluctuations are caused by myriad factors like the global stock market, natural calamities, political crises, etc., none of which are under the control of the supply chain. These fluctuations in prices can impact the supply chain in the following ways:

  • Fluctuations in transportation prices can get uneconomical for the industry. 
  • Instability in the forecasting of demand and supply due to changing prices of products. 
  • Price Fluctuations can lead to unpredictable market volatility.

4. Unanticipated Delays

With delivery options like same-day delivery, one-day, and express delivery, consumers are increasingly expecting fast deliveries and no delays. However, time delays are inherent properties of the supply chain. Especially with longer distances, modes of transportation, and products being sourced internationally, delays are getting progressively tricky to predict.

Inefficient manufacturing and production processes can also cause delays. These delays can be caused by human error or other challenges, such as inefficient material procurement, a lack of standardized processes, or an inability to adapt to changing demand patterns.

5. Adaptability to Changing Trends

The world is moving forward at a fast pace. Naturally, the trends in any industry keep changing with time. Adapting to these trends is challenging for the supply chain because it requires inevitable learning, adapting to new processes, and letting go of obsolete methods to accommodate new ones, which can be resource-demanding and costly. 

For example, many consumers currently prefer sustainable options in the SCM industry, like circular supply chains, over linear supply chains, where products to be discarded are recycled and renewed. Although this is cost-effective, adapting to more sustainable options can be challenging for many supply chain companies.

6. Digitalization

Digitalization of the supply chain is an essential step to enable growth in the industry. What makes it challenging is the implementation of these technologies in a way that is both efficient and effective. Technology syncs various supply chain nodes, which helps with forecasting and brings visibility to prepare for any mishaps that may occur in the supply chain. If these connections aren’t managed, the SCM industry will be unable to assess essential data points and actionable information to figure out how effective and flexible a company’s planning and production strategies are.

Many companies want to set up autonomous supply chains but implementing supply chain technologies from start to finish will be very time-consuming and highly expensive.

7. Port Congestion

Port congestion happens when a ship arrives at a port but cannot load or unload its freight because the station is already at capacity. Bad weather, accidents, port equipment damage, unpredictable trade demand, and poor port infrastructure are some of the factors that trigger congestion at ports. 

Port congestion can lead to delays in delivery, queueing, and extra travel time. These consequences translate into additional costs, loss of trade, low productivity, restricted port access, and other effects that can be irrecuperable to the logistics and supply chain industry.  

Conclusion

When we look at the supply chain process, we can see that there are many problems in the supply chain management industry. It is necessary to have a strategy and measure critical components in order to comprehend and manage the supply chain industry. 

It is vital for the industry to look at these challenges as opportunities for improvements, as taking effective action is essential to maintain the integrity of the supply chain and logistics industry

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