The modern supply chain can be complicated. Thanks to the advent of the internet, globalization, and international shipping, the average supply chain has transformed from a simple process into a large, sweeping matrix of processes that can be hard to corral and even harder to optimize.
And in the spectrum of supply chain problems and solutions, several problems in particular tend to influence supply chain efficiency. Let’s break down these issues and discuss how businesses owners can cope with the ongoing challenges of supply chain management.
Even in smaller companies, the modern supply chain is a large and complicated beast. There are plenty of processes in place when it comes to managing, procuring and distributing goods to customers.
And, supply chain managers don’t always have the information they need to make informed decisions regarding how to optimize these processes.
Just think about every supplier, vendor, and distribution partner in your supply chain. Each vendor has its own processes and benchmarks for supply chain efficiency, and few operators have the time to run detailed analyses of how each vendor will perform. This is why supply chain simulation tools are so powerful for boosting system efficiency.
With the right modeling software, you can get complete visibility into how your supply chain looks and functions. Run detailed simulations on how your supply chain will perform under specific conditions, and get more insight into logistical bottlenecks giving you grief. This is an important way to better protect yourself from global supply chain challenges you may encounter.
For example, if a transportation vendor falls behind schedule, it creates a domino effect where transportation and transportation schedules will be affected down the line. Simulation software offers an important visualization tool that gives you an entirely new perspective on any supply chain challenge you may encounter.
Supply Chain Problems with Vendor Relationships
Naturally, vendor management is an ongoing supply chain challenge. Although vendors may try their best to stick to agreed-upon performance requirements set in your service-level agreement (SLA), it’s common for inefficiencies to crop up – and these inefficiencies are usually hard to detect.
There may be excessive lead times in distributing products. There may be an untenable rate of product loss during inventory handoffs. Or maybe, the problem is as simple as poor communication. Regardless of the issue, supply chain managers need to pay close attention to their vendor relationships to address these issues.
Ideally, companies will use a visualization tool to run their supply chains in different scenarios and get a feel for where processes could be improved. From there, performance data from each vendor should be assessed and, combined with an ideal, simulated outcome, managers can work with their vendors to optimize wherever possible. Of course, vendors who chronically underperform may need to be replaced, and if so, simulation modelling tools can help you determine what features to look for your new partner. This isn’t a simple supply chain management issue to tackle, but it’s vital to the long-term health of your operation.
Inventory Management Supply Chain Challenges
Inventory carrying costs are one of the biggest factors in supply chain management and profitability. Aside from the expense of holding the inventory itself, there are costs associated with calculating product shipment value, optimal routing, warehousing schedules, and the inevitable return processes for damaged/defective merchandise.
Generally speaking, these issues result in expensive workarounds that detract from supply chain costs. Extra inventory may need to be kept on the balance sheet, or companies may need to lease redundant warehouse facilities to accommodate fluctuating inventory in transit.
But like our other challenges, the solution to supply chain problems comes in the form of intelligence tools that offer new perspectives on current supply chain issues. Rather than pouring over spreadsheets and looking for tiny areas of inventory inefficiency, why not use broader visualization tools that lay out the entire supply chain from end-to-end?
Modelling software shows you a framework for how every vendor, touchpoint, and process works to meet the supply chain’s goals. When you combine these tools with the specific inventory tracking data points that already live in your enterprise resource planning (ERP) software, it’s easy to see where your inventory operations may be coming up short.
Supply Chain Management Customer Service Challenges
The above three problems often trickle down into another of the most common problems in supply chain management, and that’s customer service. Service quality is hard to maintain as a supply chain grows. With every new vendor, supplier, or partner added to the system, there’s an extra level of complexity that you’ll need to account for in what you promise to customers. This makes customer service a crucial supply chain management issue to consider.
For example, you may have a transportation vendor helping you provide a two-day delivery – but what happens when that vendor experiences a delay? Does your supply chain have the flexibility to expedite shipping to preserve the agreed-upon delivery date? Many supply chains don’t, inevitably leading to a poor customer experience.
Supply chain information tools help streamline supply chain problems across the board, giving you the data you need to understand where your service may be falling short. It’s not an easy problem to correct in a disorganized supply chain, but getting more insight into the chain’s weak links will make it easier to make small, ongoing improvements over time.
Reduce Current Supply Chain Issues With Proper Risk Management
Of all the challenges of supply chain management, one of the most omnipresent is risk. Every supply chain is subject to risk, whether it’s from vendor mismanagement, product theft, natural disasters, or unexpected shifts in supply/demand. There’s a lot that can go wrong, and as your supply chain becomes bigger and more complex, the risks increase.
To stay ahead of these supply chain problems, operators need a thorough way to evaluate and assess avenues of risk before they materialize. Predictive modeling is the answer, here.
With simulation software, operators can set up and forecast global supply chain challenges all within a closed system. For example, you can prepare for what might happen in the event of an earthquake, a vendor disruption, or any number of current supply chain issues (such as disease outbreak) that might slow your operation.
It’s not about predicting the future – it’s about having the data you need to make your operation more resilient in the face of supply chain problems, no matter what they might be.
A Simple Solution to Supply Chain Problems
As companies grow, they’re sure to encounter supply chain problems and solutions in equal measure. If you want to optimize your processes, you’ll need to take a hard look at your available resources and determine whether you’re experiencing some of the above common problems in supply chain management. If so, a new system of predictive modeling, planning, and visualization might give you the edge you need to bring things back together.
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