Common Supply Chain Problems and How to Solve Them

 

1. Raw materials shortages

Issue

Materials scarcity is as it says on the tin – when the raw materials required for production aren’t readily available. This tends to happen when global shipping is disrupted, affecting your ability to import what you need, or something has happened to impact the production of materials – like a disease hitting growers, or conflict affecting factories.

Solution

It’s not an easy thing to solve, but four strategies can really help:

  • Diversify your suppliers, so you can pick and choose between them in the event that a catastrophe hits one region more than another.
  • Consider on- or near-shoring where possible, so you’re dealing with locals instead.
  • Analyse your production processes and product lines to determine what you might be able to adjust, slow or stop outright in the event of materials scarcity. For example a food manufacturer might swap out similar ingredients in recipes.
  • Ensure you’re up to date on your suppliers' circumstances, so you stay on top of any big changes.

2. Supply chain disruptions

Issue

Supply chain disruption is any event which interrupts the regular flow of trade goods around the world. This could result in materials scarcity, described above, or higher costs, slower shipments, poor quality and the loss of preferred partners.

Solution

  • Performing a risk analysis, to understand your most at-risk supply chain partners as defined by potential impact on your business versus likelihood of disruption. Any disruption which is highly likely and highly impactful needs a contingency plan.
  • Consider building a materials stockpile, if you can afford the inventory holding costs, which could help you stay on top of production during a shipping slowdown.
  • Improve your visibility over the supply chain so you can spot red flags as they occur.

3. Issues with supply chain management

Issue

Supply chain management is the planning and strategy side to procurement. When issues with the supply chain occur, it doesn’t just affect the production line, but also any plans and forecasts.

Common supply chain management issues include:

  • Demand unexpectedly changes.
  • Increasing costs.
  • Supply chain uncertainty.
  • Shipping delays.
  • Labour shortages.
  • Quality issues.

Solution

The key to responding well to supply chain issues is to get really good at forecasting.

Forecasting is the act of comparing internal data (i.e. historical sales, peaks and troughs, etc.) with your own industry expertise and close consideration of important news topics. Theoretically, with good forecasting you should be able to spot surges or drops in customer demand, risks with your supply chain partners, the potential for increasing costs, and more.

When you can spot those issues before they occur, you can plan to mitigate them.

 Common Supply Chain Problems and How to Solve Them


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