How to Solve System Problems in Today's Supply Chains?
The global manufacturing supply chain is a single, integrated trade ecosystem that requires everyone's participation to function efficiently and smoothly. Technology is a critical part of this solution.
August 24, 2023 Robert Parker DP World
Solving the persistent problems in today's manufacturing supply chains requires global communication and collaboration.
We often address the problems facing today's manufacturing supply chains in isolation. Inventory management issues are different from poor contingency planning. These are separate challenges from ensuring supply chain visibility and finding reliable suppliers. Logistics challenges are also numerous and diverse. They are all fundamentally different.
However, they are so interconnected that they can only be overcome if we address them holistically.
The global manufacturing supply chain is a single, integrated trade ecosystem that requires everyone's participation to function efficiently and smoothly. Technology is a critical part of the solution. But technology is precisely where the work begins. Ultimately, suppliers, manufacturers, and customers must all commit to continuous communication and collaboration to ensure the manufacturing supply chain functions as we all desire.
The five most common challenges faced in the manufacturing supply chain are:
Supplier reliability
In recent years, concerns about global political instability have led many countries, particularly in North America and Western Europe, to adopt nearshoring. This has shortened supply chains not only physically but also sociopolitically. The aggressive expansion of the North American auto industry in Mexico exemplifies physical shortening, while the relocation of some Western companies' facilities away from political centers to countries with reliable democratic governance systems exemplifies sociopolitical shortening. Nearshoring increases the likelihood of resolving some of the most challenging supply chain challenges. However, it alone does not guarantee success.
Supply chain visibility
Supply chain visibility issues compound all the other challenges you may face. Without effective visibility into where your shipments are in the world, which carriers are carrying them, what delays they're encountering, their expected arrival times, and what this means for your inventory, addressing all the known challenges becomes nearly impossible. A manufacturer without visibility into its supply chain can lose control of its operations and ultimately go bankrupt. A company might manage to stumble forward for a while, but in the current environment, the challenges are too great to fly blindly. That's how crucial supply chain visibility is in 2023. Fortunately, the solution is relatively simple: technology. When it comes to supply chain visibility technology, manufacturers don't need to go it alone. Companies can now work with an end-to-end service provider, giving them complete visibility into their supply chain.
Poor inventory management
Effective inventory management without the right software is increasingly impossible. Large companies already know this. However, some small and medium-sized companies still prefer to have their employees walk around the warehouse with a tablet or paper to perform inventory, rather than investing in a technology solution. However, this period won't last long. Small and medium-sized companies often struggle with cost (software is perceived as too expensive), complexity (software needs to provide a variety of immediate solutions to be effective), or culture (they have traditionally managed inventory manually), but these challenges pale in comparison to the competitive disadvantages of poor inventory management. These few challenges can be partially or completely addressed through technology. But of course, software alone can't solve everything that challenges us in global trade.
Logistics Challenges
Logistics challenges will never completely disappear. Ask anyone in the manufacturing industry and they'll tell you this. Due to equipment availability issues, mechanical issues, bottlenecks at ports, roads, and rail lines, weather-related events, political unrest, and a myriad of other reasons, freight transported around the world is rerouted millions of times. The sheer scope of a typical manufacturer's supply chain—even if it involves nearby regions and is optimized with the latest technology—significantly increases the likelihood of something going wrong. This leads shippers and manufacturers to another question: What happens when something goes wrong?
Contingency Planning
It could be argued that the global supply chain hasn't optimized its ability to plan for the unexpected. This also applies to individual companies. Consider what's happening in the world right now. This is understandable. If a manufacturer lacks visibility into its supply chain (problem No. 2), how can it effectively plan for logistical challenges (problem No. 4)? If the same manufacturer has a supplier reliability problem (problem No. 1), this will be exacerbated by poor inventory management (problem No. 3).
A System-Level Problem Requires a System-Level Solution
While manufacturers can address some of these issues by leveraging technology or choosing reliable logistics companies, this is a system-level problem and requires a system-level solution.
There's no magic bullet to solve this problem. However, even large organizations cannot implement all the necessary changes without the collaboration, commitment, and collaboration of other players in the supply chain.
This is a global problem—everyone's problem worldwide.
Source: https://www.sdcexec.com/transportation/ocean-ports-carriers/article/22870017/dp-world-how-to-solve-the-systemlevel-problems-in-todays-supply-chains?utm_source=flipboard&utm_content=SDCExec%2Fmagazine%2FSupply+Chain+Procurement