Effective supply chains not only keep production running smoothly to keep customers happy, but also offer significant competitive and business advantages. Supply chain management (SCM) helps enterprises, especially manufacturers, monitor their logistics. It ensures that raw materials reach manufacturing units and customers receive products seamlessly.
SCM maintains this optimal flow of raw materials and finished products through supply chains by accurately forecasting demand and improving inventory management. Any challenge to the supply chain flow causes major disruptions.
Some challenges to supply chains include the following:
- Fast-changing market conditions
- Quality issues
- Regulatory compliance
- Risk and security
- Technology advancements
Globalization presents several challenges to supply chains. Companies often have manufacturing operations in countries that offer lower taxes, labor costs, and transportation charges. They also have suppliers worldwide.
As a result, SCM has become extremely complex. Supply chain professionals need real-time visibility into the supply chain operation to ensure manufacturing processes remain efficient.
When companies sell their products globally, they must adapt to different cultures and preferences. Supply chains also need to change accordingly to ensure efficent order fulfillment.
As manufacturing and sales expand globally, geopolitical developments will also affect supply chains, such as:
- Sanctions on Iran
- The passage of the Water Resources Development Act
- The 2020 sulfur cap regulation
- Rising trade barriers
Fast-changing market conditions
Consumer behavior changes according to many cultural, social, personal, and psychological factors. Enterprises feel the pressure to make their products attractive and relevant, and to introduce new, trendy products.
They also must keep manufacturing costs low as trends don’t last long and many products have short life cycles. Similarly, companies constantly update product features, switch suppliers, procure rare supplies, and deliver to new markets.
Companies must create and maintain fast and agile supply chains that adapt easily to fluctuating demands and production needs, as they play a significant role in manufacturing and distributing products.
Social media not only influences consumer behavior, but also highlights the importance of quality. Customer reviews, comments, and feedback influence shopping behavior, raise consumer expectations, and amplify the loss of reputation due to product recalls.
Companies must meet all applicable regulatory standards in manufacturing, packaging, handling, and shipping of their products. The products must pass quality control and safety tests, and companies must also prepare compliance documents, such as quality certificates, permits, and licenses.
Risk and security
In today’s world, there are numerous security and reputation risks to supply chains from anticipated and unanticipated events. Companies should associate only with reliable, regulated partners, distributors, and customers. They should proactively manage all processes and data to minimize risks.
The IDC FutureScape: Worldwide Manufacturing report states that one-third of all manufacturing supply chains will use analytics-driven cognitive capabilities by 2020. It also states that by 2021, 20% of G2000 manufacturers will rely on embedded intelligence, using advanced technologies. This means coping with new cost structures, compliance measures, and supplier capabilities.
Overcoming supply chain challenges
The 2019 Third-Party Logistics Study shows that supply chains will have to manage, analyze, and secure the massive amounts of data they receive from suppliers and customers worldwide by going digital.
The right combination of technology, data, and processes can help overcome supply chain challenges. Predictive planning, based on integrated data analysis and apt technology, provides companies with visibility and control over all supply chain processes.
2019 will be an eventful year for supply chain professionals. Those who plan all processes ahead by using the latest technology and the help of experts will succeed in keeping supply chains agile and secure.