Supply network issues ripple across organizations, and the interconnected and multi-party nature of these systems makes them prone to confusion. This for an entrepreneur he means two things. Supply chain issues are almost certain to occur, and it’s good to be prepared for them.
Supply chain disruptions are having an impact 79% of SMEs Since the start of the COVID-19 pandemic. Given how common these issues are and how costly they are, startups must be prepared to deal with supply chain issues. Learning common problems and how to manage them can give entrepreneurs a competitive edge when disruption occurs.
1. Short supply
Out of stocks are some of the most common problems in supply chains. Labor shortages, temporary closures, geopolitical tensions and many other factors can cause supply to fall short of demand, especially amid shifting consumer trends.
Shortages are costly and common as consumer goods companies hit $82 billion in lost revenue From out of stock in 2021.
Management method
Visibility is key to avoiding stockouts. The more transparent companies are with their suppliers and logistics partners, the faster they can anticipate and respond to shortages. Internet of Things (IoT) systems are an ideal solution as they provide real-time insight into inventory levels and shipping locations.
Ensuring safety stocks and distributing sources to remove single dependencies also helps. These practices don’t align with common lean ideologies, but they make the supply chain more resilient.
2. Bullwhip effect
Many supply chains grapple with a related but distinct problem: the whip effect. This phenomenon occurs when companies overreact to shortages and over-order, creating surpluses. As supply shortages and surges in demand become more common, so too will the whip effect.
Management method
As with out-of-stock, transparency is the answer for dealing with the bullwhip effect. Businesses need to maintain high visibility to their suppliers, downstream supply chain partners, and customers. Since the bullwhip effect is ultimately a matter of demand distortion, it requires a solid and reliable understanding of the market and its changes.
Artificial intelligence (AI) can help us understand that. Predictive analytics models can make highly accurate predictions based on historical trends, and real-world use cases back this up.Furniture giant IKEA improves demand forecast accuracy 92% to 98% By introducing an AI-based system,
Also read: 3 Critical Challenges for the Trucking Industry and How to Solve Them
3. Fleet management issues
Transportation-related issues deserve attention, as transportation is another important factor in the supply chain. Truck fleets have a huge impact on lead times, inventory availability and costs, yet many companies lack insight and control over them.
This disconnection makes your business vulnerable to disruptions from breakdowns, traffic, and accidents.
Management method
IoT systems and employee training are two of the best assets for improving fleet management. Telematics platforms can provide real-time information about truck locations to inform better schedules and hold drivers accountable for dangerous driving. The result is faster shipping and avoids rough shipping. Companies spend $463 billion annually Regarding traffic accident lawsuits.
Businesses can also use telematics to track truck maintenance schedules and prevent breakdowns. More thorough training of drivers will help minimize accidents and address labor issues.
4. Cyber attacks
Addressing many supply chain issues requires increased digitization. While this is a fundamental change, it also introduces cybercrime risks.amazing By 2022, 98% of businesses will As compromises from others have occurred in the supply chain, managing these vulnerabilities is essential.
Management method
The first step in preventing supply chain cyberattacks is to hold vendors and third parties to high standards. Require proof of credible cybersecurity measures before sharing data or granting digital access to other parties. Even so, give each company as much access as it needs to perform its role.
You also need internal protection. Use the latest cybersecurity software, train every employee on security best practices, host his IoT device on a separate network from sensitive systems, and limit access privileges as much as possible. We also recommend keeping encrypted backups of all mission-critical data.
5. Labor shortage
Entrepreneurs should also expect to address labor shortages in their supply chains.trucking industry Very high turnover rate, warehouses often struggle to hire enough employees to keep up with increased demand. Even when such shortages occur outside the organization, they are still affected as they limit supplier productivity.
Management method
Automation is the easiest solution to labor shortages. Employing robots to work alongside human employees will enable facilities to meet higher demand despite lower staffing levels.
Changes in employee management can also help. Increased wages, flexible scheduling, career advancement opportunities, and rewards for top performance can boost productivity and morale to keep staff at bay.
SuN takeout
While some supply chain disruptions are inevitable, businesses can prevent and mitigate many problems with the right approach. The first step is to know the common obstacles you may face.
If you can prepare for these five challenges, you’ll have a head start on optimizing your supply chain. That way, your business can grow even when your competitors are struggling.