As a businessman, you must be aware of the importance of supply chain management system and its role in enhancing productivity, efficiency and revenue generation for your firm. In simple words, supply chain management refers to all the processes involved in executing a product’s flow, right from manufacturing to distribution to customers.
However, as business organisations face multiple hinderances, both internal and external, the same might affect the supply chain management system. A 2016 report from the Business Continuity Institute found seven out of 10 respondents reporting one at least one supply chain disruption with 40% of the incident occurring at Tier I level. In this article we have listed some obstacles that can disrupt this system:
1. Changing Preference of Customers
Cultural, social, and psychological factors play an important role in shaping a consumer’s behaviour towards a particular product or brand. However, today, with rapidly changing preferences of customers, there’s pressure on firms to respond to them within a short time, in order to stay competitive and relevant.
This means that the enterprises need to introduce new products keeping manufacturing costs along with upgrading their existing products. The time taken to accommodate such changes can disrupt the supply chain system.
2. Inefficient Supplier Relationship and Inventory Management
Supply chain management is all about providing customers with the right product at the right time. This is possible by strongly bonding with suppliers and effective inventory management. On the other hand, disagreement with suppliers and ineffective management of inventory can disrupt the entire system, resulting in loss of money, time and effort.
The best way to overcome this is to come up and document a set of mutually agreed terms and conditions and automate the inventory process through a software to get real-time updates on inflow and outflow of goods.
3. Globalisation
Though globalisation has led to the increased demand for the products worldwide, it has also posed a serious challenge for companies to maintain and streamline their supply chain systems. Today, the process of manufacturing may involve relocating to other countries or importing parts across geographies to lower costs and tax implications.
However, this results in understanding global trade lines and formulate a roadmap to optimise the supply chain management system. Doing so can take a lot of time and disrupt the system.
4. Compliances
If navigating global markets is challenging, understanding and meeting various regional, national, and international compliances can be even more taxing.
Even if a company manufactures and sells something as simple as machinery toys, there are several rules and regulations that it needs to comply with to keep operations smooth. These sets of compliances also need to be implemented across the entire supply chain system, which can be a hinderance.
5. Cyber Threats
To meet the ever-evolving consumer demand, by analysing data, supply chains are increasingly being digitised. Though it has its own set of advantages, it also poses the threat of cyber-attacks. It can come from anywhere and can lead to financial and reputational damages that can’t be repaired.
While some attacks can disrupt the normal flow of business activity, others can copy or rearrange vital data, which can have severe repercussions across the value chain. Thus, it’s imperative to safeguard supply chain systems from cyber threats by adopting robust measures at every step.
In a competitive setup, supply chain management is all set to become complex in the coming days. However, it’s important to periodically review your supply chain system, identify the loopholes and take corrective measures. An uninterrupted and robust supply chain management not only boosts operations but also enhances revenues in the long run.
