In today’s interconnected world, supply chain challenges can be found around every corner. Whether large-scale global events or infrastructure issues, they all affect the delicate supply chain ecosystem. In this post, we’ll dive into the primary factors responsible for slowing down the global supply chain.
Supply Chain Challenges
#1 Global events
Natural disasters, pandemics, and geopolitical tensions can wreak havoc on supply chains. Think back recently to the COVID-19 pandemic, and its effect on our supply chains worldwide is undeniable. We all felt the ramifications. These uncontrollable events can disrupt production, transportation, and logistics, leading to significant delays.
Extreme weather, like ongoing droughts, can impact crops that not only affect domestic food production, but can contribute to global food price volatility if that country is a major exporter of a certain crop. Wildfires don’t just damage crops, they can damage infrastructure and disrupt supply chains as well. Tropical storms and hurricanes can disrupt fuel production and distribution and even close down major ports. All of these factors are supply chain challenges that lead to delays, inefficiencies, and lack of productivity.
#2 Transportation Issues
Moving goods throughout the supply chain is tricky, and involves multiple hurdles. It’s more than merely moving goods from one place to another; transportation ensures the seamless operation of processes within the entire supply chain. Shipping delays, port congestion, a shortage of shipping containers, and limited air and sea freight capacity all contribute to slower transit times. Without adequate transportation, nothing can move.
So many factors must be taken into consideration when it comes to optimizing transportation, the types of goods being moved, vehicle capacity, type of vehicle used, geographical concerns, security concerns, regulatory requirements, fuel costs, and more. One hiccup and all of a sudden the entire chain is on hold, waiting for the kinks to clear out so the movement of goods can start up again. With transportation, more can go wrong than right.
#3 Labor Shortages
The manufacturing, warehousing, and transportation sectors have faced a skilled labor shortage for years, leading to significant bottlenecks. Without adequate staffing, production rates slow down, and handling and delivery processes are delayed. This shortage impacts all parts of the supply chain, from those sourcing raw materials to those loading and unloading at various ports, and the lack of truck drivers exacerbates these delays. Ultimately, supply chain challenges like a shortage in labor trickle down to the consumer in very noticeable ways, whether they be delays or spikes in cost.
#4 Regulatory and Trade Barriers:
Tariffs, trade restrictions, and constantly changing regulations can complicate international trade, slowing down the movement of goods and adding to supply chain delays. The uncertainty surrounding these barriers impacts a company’s ability to plan and invest in new markets or technologies. Tariffs often lead to increased costs for imported goods, which can affect how companies source materials and where products are made, further impacting the supply chain.
#5 Supply and Demand Imbalances
Fluctuations in supply and demand will almost always lead to disruptions. Whether a business is facing sudden spikes in demand, shortages of raw materials, or both, the consequence is usually bottlenecks, slowing down the entire supply chain. One need only think back on the shortage of toilet paper from the COVID-19 pandemic, and the effect supply and demand have on the supply chain becomes abundantly clear.
#6 Technology and Infrastructure Issues
Outdated or inadequate technology and infrastructure can impede supply chain efficiency. With some warehouses still using manual, paper-based processes, errors are bound to occur, which leads to delays. For supply chains to thrive, infrastructure must be designed to ensure the optimal performance of the supply chain, a significantly monumental task.
Investing in modern systems and infrastructure is crucial to maintaining smooth operations and avoiding delays. Every operation will have a different set of needs, so finding the right balance between a technology that can scale and one that offers all the necessary features to improve efficiency is essential.
#7 Financial Constraints
Technology is always evolving, and staying up to date can be difficult, especially for companies with limited access to capital or experiencing financial instability. Financial concerns can prevent a company from investing in the resources necessary to run an operation smoothly, or to its full potential. These limitations extend beyond technology and impact inventory counts and labor.
#8 Environmental Factors
The call for sustainability practices is resonating widely. Climate change and stringent environmental regulations affect supply chains by impacting resource availability and transportation efficiency. Companies must address carbon emissions from transportation, excessive waste from packaging, raw material scarcity, and increasing regulations, all of which can delay or halt production. With new regulations and mounting pressure from consumers and stakeholders, companies must navigate these supply chain challenges to maintain steady operations.
#9 Cybersecurity Threats
The more infused with technology the supply chain becomes, the greater the need for enhanced cybersecurity measures. The fact is, the digital nature of modern supply chains makes them vulnerable to cyberattacks. Cybersecurity breaches can disrupt critical systems and cause significant operational delays. Think of the 2020 SolarWinds cybersecurity breach that impacted not only thousands of organizations but the US government as well, and it’s safe to say investing in cybersecurity is critical to maintaining a smooth supply chain.
There are many ways operations can proactively safeguard themselves against threats, like empowering their workforce to be cyber-aware, maintaining and updating cybersecurity standards as needed, and being ever vigilant.
#10 Logistical Complexities
Managing global supply chains involves coordinating multiple suppliers, partners, and logistics providers. Complexities related to operating models, equipment, product design, network, supplier, product, inventory, and business models all have an impact on the smooth running of the supply chain. One thing is for certain, the complexities will always be there, so the solution isn’t to simplify the supply chain (that’s not possible), it is to build strategies to embrace those complexities.
How to Address Supply Chain Challenges
While it’s impossible to safeguard against all issues slowing down your supply chain, there are plenty of strategies to put in place to ensure you’re better prepared to face any complications head-on. Here are a few to get you started.
- Invest in Warehouse Management Systems (WMS). A WMS will track the movement of goods and ensure better inventory management, reducing errors and delays.
- Diversify supply sources across different regions. This can help you avoid complete shutdowns if one supplier is affected by a disaster or geopolitical event.
- Implement a Transportation Management System (TMS) to streamline logistics by optimizing routes, consolidating shipments, and improving visibility across the supply chain.
- Automate repetitive tasks in manufacturing and warehousing to help address labor shortages.
- Develop training programs and invest in workforce development to alleviate labor shortages by upskilling existing employees and attracting new talent.
- Use advanced analytics and artificial intelligence (AI) to help improve demand forecasting and inventory management, which can help reduce the impact of supply and demand imbalances.
- Bolster cybersecurity measures by regularly updating systems, conducting security audits, and training employees on cybersecurity best practices to help safeguard supply chain operations.
- Build strong relationships with suppliers to foster long-term relationships that can lead to better planning, more reliable supply, and quicker resolution of issues. This can help improve how you navigate logistical complexities more effectively.
Facing Supply Chain Challenges
Navigating supply chain challenges requires a multi-faceted approach that considers all these complexities. By understanding and addressing these challenges, businesses can build resilient supply chains capable of withstanding disruptions and maintaining efficient operations. For operations looking for strategies or technologies to improve their productivity, Cornerstone Edge can help. Give us a shout, and let’s see how we can make your supply chain your differentiator, together.