The COVID-19 pandemic made it abundantly clear that effective supply chain management is crucial to the success of a business. Moreover, it’s vital to the health of the global economy. The pandemic crisis had global ramifications felt throughout the entire supply chain, from raw materials to finished products, and for many companies, building the resiliency needed to weather such storms has become the #1 challenge of supply chain management. What that looks like, however, isn’t necessarily the same across the board. The companies most prepared to mitigate the impact are those that had implemented risk management and business continuity strategies. “They have also diversified their supply chains from a geographic perspective to reduce the supply-side risks from any one country or region,” explains Deloitte. “They have multi-sourced key commodities or strategic components to reduce their reliance on any one supplier, and they had considered inventory strategy to buffer against supply chain disruption.”
Undoubtedly, many businesses have learned valuable lessons during the COVID-19 pandemic and the aftermath of unprecedented economic shutdowns. As supply chain networks continue to recover from perhaps the most significant global supply chain disruption in history, supply chain leaders are rethinking their supply chain structures and implementing strategies to improve resilience, from reevaluating the value of safety stocks to improving fulfillment.
Technology adoption, such as robotics, is expected to continue to grow post-pandemic, as well. “This trend will continue when we emerge, but we are also witnessing unemployment in sectors that will not simply hand the role to a robot,” explains Guy Courtin, Director of Partners and Alliances at 6 River Systems. “I predict we will see a greater adoption of automated tools assisting, rather than replacing, humans in specific roles within our supply chains: warehouse, manufacturing and distribution.” For example, collaborative mobile robots like Chuck by 6 River Systems leverage AI and machine learning to optimize pick routes in real-time and prioritizing tasks based on current conditions on the warehouse floor. Leading associates through work zones, collaborative robots help to minimize walking and keep associates on-task, which can help to reduce in-aisle traffic congestion and contribute to keeping associates at safer distances.
To learn more about the biggest challenges of supply chain management top on the minds of supply chain leaders today, we reached out to a panel of supply chain experts and business leaders and asked them to answer this question:
“What’s the #1 challenge of supply chain management (and how do you solve it)?”
Meet Our Panel of Supply Chain Experts & Business Leaders:
Read on to learn what our contributors had to say about the biggest challenges of supply chain management and how you can solve them to prepare your business to weather everything from natural ebbs and flows to unpredictable global crises.
Russell Lawson is the Managing Director of The Ideas Distillery, a company that helps businesses secure their ISO 9001, ISO 14001, ISO 45001, ISO 27001 certification and, in the process, improve the way they do business.
“As a company which installs management systems in businesses of all sizes and sectors, we’ve found that there are actually three main areas which companies need to address when it comes to their supply chains…”
The main challenge is getting a system in place which addresses all of these in one synchronized whole. We’ve categorized them into: viability, reliability and accountability.
Viability is when you’re taking on a new supplier for the first time. There actually needs to be a good amount of due diligence, especially for those who will be key to your final delivery of your product or service. How viable are they themselves as a company? Have they got the expertise, track record and competence to do what you need them to do? Are they a viable company — it’s no good if they’re always teetering on the edge of going bust, so what’s their creditworthiness? Do they have a good reputation in the industry?
Reliability is obvious, but it never ceases to amaze us how many companies carry out no systematic review of their suppliers at all. This needs to be at a minimum annually — more (if not constant) if they are a key supplier with an ability to impact on your work — and needs to address things like their on-time delivery, quality of work, cost-effectiveness, interface with your clients (if applicable), etc. If there are issues, are they ongoing? Have any root causes been identified and closed out?
Finally, accountability can also often be overlooked. This is about what they are like as a business in the way that they manage themselves and the way they operate. Do they have a Corporate Social Responsibility and Modern Slavery policy, and do they stick to this? Do they have any health and safety or environmental issues at the company, e.g., pending prosecutions or licence withdrawals? This can all come back to your company — if their reputation is getting tarnished, then you’ll get your reputation tarnished by association.
So this brings us to the #1 challenge — putting in a coherent system which addresses all of these points in a comprehensive and ongoing way. Making sure that there is a supplier journey — just like you would operate a customer or client journey — which consists of effective on-boarding, monitoring and feedback.
Michael D. Brown
Michael D. Brown is the Director of Fresh Results Institute. He is a Global Management expert known for driving results through (and with) companies, organizations and academia.
“I think the two major problems afflicting supply chain management are globalization and risk management…”
Allow me to dive deeper into them and their respective solutions.
The challenge of globalization
Yes, the world is fast becoming a global village, but not everything is jolly about that. Globalization is fast becoming a headache for supply chain managers as more companies are diversifying their operations, especially manufacturing companies. These companies are moving operations over to lower-income countries or where they pay far less for labor and shelve taxes as well as logistic costs for raw materials.
Also, globalization presents another hydra-headed challenge for your procurement network. You are going to have more issues on your table if your suppliers are spread across multiple locations, as this could particularly complicate your supply chain.
To solve this, you need to leverage the best enterprise technology to equip you best to manage comprehensive communications across globalized channels. You also have to maximize data to identify the minutest opportunities that would give you a competitive advantage.
The challenge of risk management
The market is hyper-dynamic. It is always changing. Ever-evolving changes in global supply channels, volatile political atmospheres and fluctuating consumer demands are headaches for every supply chain manager.
How do you solve this?
Always have a deliciously effective risk management plan cooked up. You may not believe it, but pragmatism is a core virtue of the supply chain manager. Your company should be fortified with contingency mechanisms on how to manage disruptions.
One great way to do this is by leveraging the services of an efficient logistics software development company. These guys should be able to help you take care of these supply chain problems without you having to break your neck.
Suuchi Ramesh is the CEO & Founder of Suuchi, Inc.
“The number one challenge in supply chain management is identifying a system (or set of systems) that is…”
Nimble enough to connect all of a business’s supply chain participants. When there are silos or holes in the processes that these systems manage, it jeopardizes the integrity of the data. As we look towards a post-COVID market, companies across sectors will need to identify nimble systems that unify their entire supply chain to survive in a data-driven world.
Eli Diament is the founder and director of Azurite Consulting, a management consulting firm and a leading provider of unique proprietary research to B-to-B businesses.
“The #1 supply chain management problem is…”
Lack of transparency and information, both upstream and downstream, making it difficult to manage your business in between. Upstream drives supply shortages driving price spikes or limited knowledge of new, emerging suppliers with creative solutions. Downstream means that you don’t know what your end users and end customers really need or want.
For some companies and industries, this can be even more difficult, as you have wholesalers or distributors who are ‘information blockers’ because they’re selling competitive products to yours, so they don’t want you to access your end customers. For example, this is especially true in food products where product innovation can be difficult because you’re ‘blocked’ from accessing the restaurants and kitchens using your products at the end of the supply chain. It’s not just this way in food, but also in many other industries.
How to solve it? Emerging and innovative market research approaches, especially in the B2B space, allow you to access players both upstream and downstream and collect insight and perspectives from them, in large volumes, to help your company make decisions around supply chain blind spots.
Bobbie Ttooulis is the Executive Director of GFS.
“Having major peak periods (especially when it’s unpredictable and unplanned), can be particularly difficult…”
Especially if the business is using multiple marketplaces to sell products and using multiple carriers to deliver products. Peak times can cause a backlog of orders and a clogged up warehouse trying to fulfill every request. In such situations, we would always recommend to streamline the process as much as possible using software (whether that’s existing or developed in-house) to integrate any data entry and barcode/labeling systems. This both reduces the risk of error and improves speed to create a smoother shipping process.
Sara White is the Marketing Coordinator for SupplyPike, a supply chain software solutions startup in Fayetteville, Arkansas. She is in charge of providing content to their supplier wiki, help center, and blog. She is SAP certified and has been working for SupplyPike for three years.
“For suppliers, a good demand plan can mitigate obstacles all up and down the supply chain…”
A demand plan helps identify potential expansions and potential threats to sales and product lines. A successful demand plan can significantly cut costs due to out-of-stocks, overstocks, and expedited shipping. It can also solve problems with warehouse logistics by predicting how much product should be shipped, where it should be shipped to and when it should be shipped.
Customers also require forecast models that closely match actual sales. For example, Walmart requires its suppliers to be within a 20% margin of error between their forecasts and their sales. Otherwise, Walmart will begin levying fees.
Demand plans must be intuitive and cohesive, as well as more fluid than a simple forecast model. A good demand plan takes historical data and accounts for spikes and dips in sales due to a large variety of factors, including weather patterns, promotions and viral marketing.
Accurate forecasting requires a historical blueprint of a supplier’s products, as well as detailed point-of-sales information broken down into detailed variables, such as order number, region or season. Next, the data needs to be fed into an algorithm in order to train a machine learning model using artificial intelligence. Other data analysis methods exist, of course, but machine learning offers better models because it takes into account complex nonlinear relationships. Machine learning also can incorporate non-historical data into its models to predict how future sales will go.
Sukhi Jutla is the Co-Founder and COO of MarketOrders.
“One of the main challenges to supply chain management is…”
The management of data and records, especially when supply chains are complex and often involve multiple different parties to ensure the products reach the right place safely. One way to overcome this would be to use blockchain technology to record data on decentralized ledgers, which can be accessed and cross-referenced by all the participants in the supply chain. This should speed up the transactions and help to minimize errors caused by poor records management. This would also create a more trusted view of records as the blockchain cannot be tampered with, and data is recorded in an append-only manner, so data cannot be deleted either.
Joseph Giranda is the Director of Commercial Relations at CFR Rinkens, a global leader in the shipping of commercial cargo, specializing in the containerized shipping of motor vehicles.
“The #1 challenge of supply chain management is that it is constantly evolving…”
It is critical that we are not only keeping up but that we are staying ahead of the curve. We solve this problem by finding scalable solutions that allow flexibility for anything the industry throws at us. For example, Ro-Ro, or Roll on Roll off, is the traditional method of shipping finished vehicles. This method can be challenging due to time, shipment and volume constraints. Adopting containerized shipping broadened our reach in the market and has allowed us to service more lanes safely and at increased efficiency.
In addition, having the right people at the right time can be challenging. When business surges, being able to take care of new business demands is crucial. Conversely, when the market shifts downward, having shipments to move at different volumes requires new solutions. We position ourselves well by striving to have dynamic human resources. We’ve found that it’s very important to do what you can to retain key employees and give them a path of development. It’s just as important to supplement with internships and people who are always looking to enter the industry so that you constantly have people coming in that are educated and motivated.
Mike Krabbe is a Senior Director in enVista’s Supply Chain Solutions Practice. Mike has over 20 years of experience working with clients to increase their performance in manufacturing, distribution, warehousing, transportation and developing IT strategies.
“Supply chain sustainability is the single biggest challenge in supply chain management today…”
Lean Six Sigma, removing redundant processes and cost cutting have been the cornerstones of efficient supply chain management for decades. Disruptions such as strikes at ports, natural disasters and the current global pandemic have taught us that building redundancy into your supply chain network is important in preparing for variations in supply and demand. Companies need to take the critical steps to reassess and realign their supply chains to prepare for these disruptions.
To build flexibility into their supply chain networks, companies need to source and manufacture across geographic regions, prepare contingencies, forecast what if scenarios, ensure redundancy in critical supply chain systems, locate inventory in multiple geographical regions, ensure additional capacities with multiple transportation carriers and create operational redundancies for distribution operations. Companies need to plan for and practice for disruptions in their supply chains and never stop asking and preparing for ‘What if?’
Will Ward is the founder and CEO of Assistive Listening HQ, an eCommerce company dealing with assistive listening equipment. Before being an entrepreneur, he was a consultant helping NGOs and international organizations purchase the right audio equipment for events. He loves playing banjo and resides in Northeast DC.
“Last mile logistics is the biggest challenge for eCommerce companies in supply chain management…”
Customers are always looking for fast deliveries, and it’s the last mile which often takes a lot of time. Last mile logistics is the final delivery from a distribution center to the customer.
There is a lot of complexity in last mile logistics. It involves unpacking, segregation, urban traffic and sometimes even installation expertise. There have been many cases where customers cancel the order if it comes late. There are many solutions:
- Tying up with local delivery agents can speed up the process.
- Giving customers the option to pick up from a set location can ease overall delivery logistics.
- Using route optimization techniques can make delivery efficient and thus save cost.
Michael Nemeroff is the Founder and Former CEO of RushOrderTees.
“The number one challenge of supply chain management is communication between suppliers, partners and retailers…”
The solution to this problem is to hire a dedicated person to track progress, touch base with key players in the supply chain and keep records of past meetings. Having a dedicated person to act as a middle-man to every entity within the supply chain is essential, and this person will be your “go-to” for any questions you have concerning the chain.
Jessica Rose is the Chief Executive Officer of Copper H2O, a 100% female-run eCommerce social enterprise founded in 2015 that focuses on the health and wellness industry.
“We rely heavily on supply chains and have encountered many supply chain challenges over the years…”
One of the most difficult supply chain issues is the need to avoid unforeseen supply chain cuts and delays in an increasingly unpredictable world. The best way to address unforeseen delays (such as we have seen with the pandemic) is to ensure that you have buffer inventory. The trouble with this is that it generally means needing more warehouse and storage space, which can create inefficiencies over time. However, this can be addressed to some extent by an efficient and economical warehouse and storage strategy. For example, consider keeping buffer inventory in a more economical warehouse in a rural area in order to drive down the costs of storing it. If an emergency arises and you need it, you can draw on it at that time. While having buffer inventory is not a solution in all cases, particularly in the situation of a prolonged pandemic, it can help your business weather many storms.
Lukas is the CEO of Anyline.
“One of the biggest challenges faced by supply chain professionals is how to make their processes entirely traceable and trackable…”
Businesses taking proactive steps to harness digitization will be better able to handle the volatility in the future, while providing an improved service to their end customers today.
One fast way this can be done is by introducing smartphone-based scanning for serial numbers on packages and containers, enabling end-to-end visibility from production through to delivery.
Alessandro Clemente is the Founder of Italian Food Online Store, an eCommerce store for authentic Italian products in the USA.
“Risk management is the biggest challenge in supply chain management…”
Over the years after founding Italian Food Online Store, we’ve run into many supply chain management issues. However, especially during this period, our main issue has been preparing for risk management due to the constant change that’s occurring in the market.
These risks come from a variety of sources, such as demands from the customers, a swinging political agenda and global sourcing. More troubling are the risks that arose as a result of the pandemic and the slowing down of the economy due to its wide spread across the globe and its effects on transportation to and from supplier countries to demand nations.
We’ve always had a risk management plan in place, but with further tweaking, as we anticipated in the beginning of the coronavirus outbreak, we’d secured maximum inventory and stock in advance. Holding onto a buffer stock with longer expiration dates can help during this process. Doing this can help overcome disruptions in the supply chain and manage issues with less effort. Hiring a logistics software development company is also a part of the plan that we have considered and implemented, especially since we don’t know how long the current situation will last.
Jake Rheude is the VP of Marketing at Red Stag Fulfillment. He’s passionate about eCommerce and helping entrepreneurs achieve their dreams.
“By now, we all know about Dimensional Weight and why the size of the package you ship is as much a factor as how much it weighs…”
It’s easy enough to ballpark a box size that’s close enough to the absolute minimum needed to safely enclose the product you’re shipping out. The tricky part is determining that perfect shape, because at scale, if you send packages off in larger than necessary boxes or mailers, they’re going to add up to a lot of extra shipping cost for nothing. That’s wasteful in so many ways. At Red Stag Fulfillment, we use software to automatically pick the ideal box size for every shipment that leaves our warehouse, but I’d say about 50% of the time I order something off of Amazon or another website, I receive my package in a box that’s way too big. And I have to shake my head and wonder if the people running that eCommerce business even realize how much money they’re losing on unnecessarily large packaging. There’s absolutely no sign that Dimensional Weight shipping is going to disappear, so until that happens companies either need to think smart with their packaging or waste a lot of money on oversized packaging.
Tejal Ranjan is a senior product marketing manager at Ivanti Wavelink. She has more than 15 years of experience helping companies successfully drive revenues for many different kinds of products within various industries around the globe.
“The COVID-19 pandemic has driven an increasing number of shoppers online…”
For everything from food and clothing, to essential household items and more. This, coupled with the rising demand for quick (and free) delivery, and it’s no surprise that the warehouse has had to adapt…fast. As eCommerce and consumer demands continue to grow, there will be a greater need to improve warehouse processes. Of all the activities found in a warehouse, 70% of costs are attributed to order fulfillment. As a result, many warehouses are now tapping into voice-enabled technology to help them work smarter, safer, faster and more efficiently. Implementing voice as a tool in the warehouse has been a recent win for many organizations running to keep pace with new and evolving consumer demands.
Saloni is the CEO of EcoEnclose, a business that provides completely sustainable shipping and packaging supplies with a mission to help empower others to be a positive net force for the planet.
“Especially recently, the increased demand in eCommerce packaging coupled with the reduced capacity of our manufacturers resulted in many of our items going out of stock…”
Our product is our business, so we had to shift. And we had to shift fast. We provided our customers with updates as soon as we could and suggested the best alternatives to items that were out of stock. Then we identified alternative partners for our key product lines. To other businesses facing this same problem, we highly recommend having a disaster plan in place, localizing and diversifying your supplies and seeing if there are parts of the supply chain that you can do internally (even if it’s just temporarily).
Camille Chulick is the Co-Founder of Averr.
“Since our customers are literally putting our product on their faces, we can’t cut corners…”
Of course, this can be a challenge when it comes to sourcing ingredients quickly enough to meet customer demand. We have to be ahead of any bumps that can come up so we never have to send out a product that doesn’t fit our or our customer’s standards.
It’s absolutely crucial that we are always thinking ahead and have our finger on the pulse of any price change, source problems, etc. Because if we were to have to change an ingredient, we can’t do it on the fly. We need to make sure that every single thing that goes into our product is safe, effective and visible to the customer ahead of time. When it comes to health and beauty products, you just can’t be too careful.
Ruggero Loda is the Founder of Running Shoes Guru.
“The biggest challenge of supply chain management is consistent customer service…”
With the numerous channels involved in the supply chain that can impact delivery times, it is imperative to communicate to your clients. Ensure each client has visibility of their order, and provide as much data as possible to mitigate any changes to the lead time.
It is essential to keep up with the needs of each unique customer. Providing all this data can then help them make a decision before the disruption creates an issue. Invest in new technologies that enable you to do this to meet growing demand.
Joe is the Business Development Consultant at My Trading Skills, which has over 17,000 unique visitors per month.
“The biggest challenge of SCM is guaranteeing customer satisfaction…”
Customers may have an interest in the same product, but their needs, tastes and preferences may differ greatly. It is difficult pleasing everyone with the same product.
The solution here would be customization of products. This way, the company focuses on providing unique product solutions to each customer cost effectively. If a company is able to customize solutions for its clients, then the biggest hurdle to effective SCM is cleared.
Bottom line: The biggest challenge in SCM is guaranteeing customer satisfaction because of the different customer variables at play. To counter this, companies need to come up with customized, unique solutions for their customers.
Phil is a bearded Australian living in Warsaw, Poland, helping take Packhelp’s sexy boxes to the world. When he’s not marketing boxes, he’s hanging out with his dog or killing plants in his garden.
“Packaging is something that supply chain managers often leave to the last minute or look at optimizing when costs are already too high…”
In all too many of these situations, the go-to solution is an off-the-shelf, one-size-fits-all form of packaging that ends up costing more than it should. But packaging should be one of the first things optimized in a supply chain, as it’s always needed, it’s crucial for security, and it’s important in making a good first statement. Value engineered packaging doesn’t just cut down on material usage, but it cuts down on waste and minimizes space, thus providing supply chains with the best possible product at the lowest price-per-unit possible. Experienced packaging engineers can create packaging tailor-made to each of your SKUs, or implement multiple solutions to your entire range, with the sole purpose of keeping costs down and security up.
Tal Paperin was born in the USSR in 1981 and immigrated to Israel in 1990. He has over 15 years of experience in International Sales and Marketing, and now works to help companies succeed in strategic planning, reaching new markets, sales and more worldwide. He’s married to an American, speaks Russian, Hebrew, English and Chinese and has 4 children.
“The number 1 problem is traceability…”
Supply chains are getting longer and more complex, hence the possibility of losing control over the chain — products not arriving in the agreed-upon window, or a significant portion is damaged or otherwise unusable when it arrives. Improvements in traceability are a must. How? Technology. We advised a company that deals with transportation logistics for perishable goods and delicate and expensive consumables. Whether you are selling strawberries or laptops, a device that can send you the exact location and temperature of your container every 10 minutes gives you the peace of mind that your goods are being transported in a way that ensures high viability. You can also pinpoint theft if the container lingers too long in an unexpected location.
Shari Smith is a business coach and founder of Shari-sells.
“Managing the flow of goods and looking for the best way to create a profitable product is what supply chain management is all about…”
There are several factors that can affect a product’s supply chain and as a business owner, I should identify the activities that involve supply chain management to be able to identify some major problems and create solutions for it.
The biggest supply chain management challenge is the ever-changing market. Technological advancement has been mind-blowing nowadays and in terms of supply chain management, it has created the urge to adapt to the latest innovations in the market. Raw materials cost has also skyrocketed, and companies have to make various modifications to prevent unprecedented loss.
These changes cannot be avoided, and the best thing to do is to make adjustments prior to the change. Companies should always monitor their logistics section and create alternatives that can minimize material costs while having a cost-effective product. Companies should also formulate contingency plans for any unexpected changes in the market.
Jeremy Owens is the CMO of Seriously Smoked.
“The biggest challenge in supply chain management is the spontaneity and uniqueness of problems…”
Not only is it time-consuming, but it can get mentally-draining fast if multiple issues requiring immediate attention appear at once.
Each problem that arises is entirely different from previous challenges, which requires the team to come up with a unique solution to each problem every time.
The best approach is to divide tasks into several teams so that each unit can focus on solving one problem. By assigning tasks, businesses can conquer issues with precision and accuracy without burning out team members.
Join “The Future of Fulfillment” webinar series to join the discussion about how supply chains are adapting to a new demand-driven paradigm amid a global crisis.