common problems in supply chain management

Common Problems in Supply Chain Management to Overcome

Read Time: 5 minutes

Some of the most common problems in supply chain management are as old as the hills. The good news is, new techniques and technologies are making it easier for even modestly sized companies to solve them cost-effectively. Here’s a look at several of the biggest challenges you’re likely to face and how you can deal with them.

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Personnel-Based Management Challenges

For a little while longer at least, human intuition and labor power the global supply chain. Naturally, relying on human capital for a process as complex as supply chain management can be a challenge. This challenge arrives in two forms:

  • Labor challenges
  • Management challenges

When it comes to labor challenges, keeping a clean, harmonious, safe and functional workplace is priority number one. Since your product handlers, warehouse stowers and order pickers and packers are the heart of your supply chain operation, following every applicable industrial safety standard is non-negotiable.

Employee satisfaction is another factor you need to consider. Employees do their best and safest work when they don’t have to worry about their health. Other efficiency factors include reasonable breaks and paid time off that’s in sync with the rest of the developed world.

Management challenges are common problems in the supply chain that don’t always get a lot of attention, but they probably should. In recent polling, 75 percent of supply chain managers indicated they were worried about finding qualified personnel to oversee their facilities. A lack of talent should never hold you back. If employee or manager turnover, it’s a sign your wages or benefits might not be competitive.

Alternately, it might just mean you need to expand your presence and do a better job positioning yourself as one of the best places to work in your region or state.

Lackluster Customer Service

Amazon.com is controversial at best and the scourge of small businesses and accessible housing at worst. But one of the reasons Amazon keeps succeeding is its generous and swift approach to customer service. Achieving world-class customer service should be a priority for any supply chain manager. But it’s not necessarily as easy as it sounds.

The first thing you need to do is deceptively simple. You have to think the way your clients and customers do. Transactions should be as straightforward as possible. When an issues arises, it shouldn’t take much effort to mitigate a solution.

A healthy supply chain requires transparency. This might involve bringing in a third party for logistics or even product handling for returns. As far as visibility for the customer, you need to meet them where they do business. And since the popularity of shopping on smartphones and tablets rose by about 25 percent in 2017, that means investing in your digital platforms. The information customers need, including ordering and reordering functions, order tracking, customer service contact options and more, should be easily accessible.

Controlling Costs Without Cutting Corners

Controlling operating costs has probably never been more important — nor more complex. Think about the ongoing expenses your supply chain business incurs to stay afloat and remain competitive:

  • Fuel, energy and other commodity costs
  • Freight costs
  • New technology buy-ins to remain competitive
  • Stricter labor and wage regulations
  • A global marketplace with a more diffuse customer base

Managing costs without cutting corners involves making strategic technological investments. New technology buy-ins are one of the ways costs can spiral out of control. That’s where your strategy comes in.

Many companies look before they leap where technology is concerned. So why not begin with the basics? Make sure your accounting fundamentals are strong before implementing automation or technology platforms. Consider the benefits of tools like:

  • Transportation Management Systems: A TMS could be invaluable if you rely on the timely movement of freight. Among other things, a cloud-based TMS can help you lower costs by automatically matching incoming and outgoing freight with the optimal service type. Unifying a multi-partner supply chain with a TMS can also help you optimize last-mile delivery by creating fuel-saving delivery routes.
  • Yard Management Systems: The comings and goings of freight to your facility can sometimes represent a considerable waste of time, effort and labor expenses. Managing your warehouse more effectively through YMS helps ensure trucks aren’t idling longer than necessary. You’ll save on fuel costs and help ensure your personnel aren’t waiting for the right truck to pull up to the loading dock.

Even when you’re not bringing new technology into the mix, you can still think about achieving savings logically and strategically. Here, we circle back to the above point about seeking out the right kind of management talent. You need people who can see the larger picture and who can intuit where the pieces fit harmoniously.

Unnecessarily High (or Low) Inventory Counts

According to some estimates, your inventory might represent as much as 50 percent of your company’s standing investments. That’s a tremendous amount of cash to leave sitting around if you don’t need to. So how can you dial in the right size for your inventory? Here are some thoughts:

  • Use a More Advanced Inventory System: The modern supply chain is moving toward something that looks a little like an ongoing inventory process, rather than the scheduled counting you might be used to. Now you can scan freight arriving on your dock directly into your inventory. Sometimes, thanks to Bluetooth, RFID and other low-energy technologies, this doesn’t even require hands on each piece of inventory and can be done in batches.
  • Achieve Leaner Manufacturing Through Better Forecasting: Business and supply chain analytics offer more ways for you to anticipate demand for your most critical products. Even when it comes to products whose lifecycles and “churn” is a little more erratic, business analytics platforms can help you dive into historical data to come up with a useful benchmark.
  • Find a More Competent Supplier: Loyalty is hugely important in any business. If any of your suppliers are consistently over- or under-delivering products to your warehouses, it’s time to find a more attentive stable supplier.

As you’ll see, some of the common problems in supply chain management listed here can be addressed or solved through the strategic use of technology. Other issues, such as inspiring employee morale and loyalty, fall on your shoulders alone. Still, whether it’s good tech or good governance of your business, you have options in front of you if you find yourself faced with these challenges.

Category: Manufacturing & Engineering

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Article by: Megan Ray Nichols

Megan Ray Nichols is a freelance science writer and science enthusiast. Her favorite subjects include astronomy and the environment. Megan is also a regular contributor to The Naked Scientists, Thomas Insights, and Real Clear Science. When she isn't writing, Megan loves watching movies, hiking, and stargazing.