The fallout from both Brexit and the pandemic have exposed a number of issues that are inherent in our supply chain. Lack of detailed insight and a reliance on just-in-time delivery did not give robust enough protection and the resulting stock shortages, lack of transparency and price increases caused much disruption to worldwide supply chains.
To reduce the impact, it’s important for businesses to manage supply chain issues. Here are some of the key issues and how they can best be controlled and managed.
Costs are rising across all aspects of the supply chain. Many industries have seen a rise in the costs of raw materials, which has raised the prices of finished goods.
On top of this, there are spiralling transport and logistics costs – whether for sea freight for shipping from China or increased fuel costs that have affected road transportation. All of this has compounded price pressures.
To meet these challenges, businesses cannot simply increase prices. Competition is tough and consumers are price conscious.
Instead, forging closer working relationships with your supply chain partners can help you to agree favourable terms or to implement automated methods of document sharing .
You can also seek out multi-supply strategies, so that you have additional options when sourcing materials or finished goods. Equally, finding product more locally can reduce your transport costs. And while it may sound counter-intuitive, some suppliers have found ways of collaborating with their competitors, to share costs, allowing them to get the most value from their shared supply chains. This horizontal collaboration sees companies work together, perhaps by sharing delivery costs, for example.
Stock Management Issues
Historically, the holy grail of supply chain management has been to run a lean supply chain. This makes for greater efficiencies and maximised profits. But it relies on just-in-time delivery.
Variations in supply and demand due to the effects of the pandemic and Brexit have affected the reliance on this method. Recent times have seen some exceptional spikes in demand, as well as corresponding dips in supply. The disruptions and uncertainty drove businesses to abandon just-in-time fulfilment and embrace just-in-case strategies instead.
Balancing supply and demand is a fine art. You can’t hold too much stock as it ties up your cash, but you also cannot afford to run out, as you then miss out on sales. If you import materials or finished goods, the long lead times can add further uncertainty to any plans.
To overcome these supply chain issues, you need to have accurate demand forecasting and planning. ERP solutions can deliver here. They give greater oversight of all your channels, so you can see orders across stores, your website and third-party marketplaces – even your call centre or mail order channel – however you operate. You get greater detail and information, helping you to plan better, and you can react to out of stock situations by allocating goods to a different channel, or can spot problems more quickly, allowing you to re-order in good time.
Again, strengthening supplier partnerships and seeking out alternative providers can also help avoid supply chain issues. Developing and nurturing relationships through traditional methods has been overlooked in our digitally transformed world. Instead of emails and messaging, pursuing a more collaborative approach with counterparts, via in-person meetings and communications, might just be the difference that ensures you are given more favourable pricing, or receive stock when others do not.
Lack of Transparency
Complex supply chains can be impacted by a lack of transparency. Insight into the full supply chain helps you achieve a better understanding of how robust each player in the chain is and how disruptions might affect each supplier along the way.
With greater insight, you can put in place mitigation plans in case your suppliers have problems. To achieve in-depth understanding of your supply chain, you need to rigorously investigate all the businesses involved, right back to the raw materials providers. Then, you can assess the risks and set goals or contingency plans to minimise any problems.
For some suppliers, order tracking is an issue. After despatch and before the delivery to the customer, there can be a black hole. They can’t track the order and neither can the customer. Some even lack the technology to communicate to the customer that their order has been despatched, let alone allow them to identify who the carrier is, receive an expected delivery date or see live tracking information.
Good customer communication is key to engendering future loyalty. Working with carriers that can provide live tracking, so that all parties can see delivery status, brings a higher degree of trust.
Accelerating the Movement of Goods through the Supply Chain
The supply chain is fraught with opportunities for delay. All sorts of transportation bottlenecks can come about through not having the right paperwork and admin in place.
Better attention to quality control can help mitigate supply chain issues and delays. Keeping a careful check of processes and quality ensures that nothing is ever amiss and that there is no risk of delays.
Incorporating electronic automation, such as through using electronic data interchange (EDI), barcode scanners, or Optical Character Recognition (OCR) can all speed up the movement of your goods through the supply chain.
Of course, sometimes, through no fault of the receiver at all, extraordinary events might cause lengthy delays – as happened after the blockage of the Suez Canal.
While this sort of situation cannot be predicted, there are mitigations that can be made. Local sourcing can alleviate the reliance on international shipping. For many years, suppliers have been heavily dependent on sourcing cheap goods from China. While the costs of production are low, there is considerable risk in transporting shipments from China. Not only is it increasingly costly and takes a long time for goods to cross the oceans, there is a significant risk of total loss, with hundreds of containers lost at sea each year.
Lack of Investment in Technology
With limited investment in technology, processes suffer from inefficiencies and require more manual labour. There’s a lack of analytical insight and no real time view of stock levels or orders.
When systems do not integrate with each other, staff have to rekey data into several applications, which takes additional time and comes with a risk of errors.
A digital transformation programme can improve supply chain issues. It might be as simple as upgrading an old legacy system and implementing a modern ERP solution instead. This can bring greater automation of processes, optimised warehouse practices, advanced reporting and insights.
All of this makes decision-making quicker and easier. Stock is optimised and planning and forecasting are simpler and more accurate.
NetSuite ERP is the world’s number one cloud business software suite. Not only does it manage your finance and accounting, but it also gives you clearer visibility and greater control of your stock.
For better management of your supply chain issues, contact us today.