Significant challenges in Supply Chain Management and how to solve them
Supply Chain Management (SCM) manages the flow of materials and services from their point of origin throughout the supply chain. Supply Chain Management is important because it helps companies reduce costs, improve efficiency and profits, and mitigate supply chain management risks and challenges.
SCM can be applied to all industries, but it is particularly effective in industries with multiple parties involved in the manufacturing process. In these cases, SCM helps ensure that all parties work efficiently while reducing waste and increasing customer satisfaction.
For more information about the supply chain management course, check out our supply chain course details.
Challenges in Supply Chain Management
When managing the flow of goods from point A to point B, many challenges of supply chain management can arise.
The following are just a few of the issues in supply chain management you may face:
- Supply Chain Fragmentation
Supply chain fragmentation happens when multiple vendors and suppliers produce a product, creating an efficient and reliable chain of command. It can also occur when organizations have too many layers of management or too many people who need to approve things.
In this case, a company may have to get approval from 10 different people to make one small purchase. This causes delays in fulfilling orders, leading to missed deadlines and unhappy customers.
- Material Scarcity
Material scarcity is one of the challenges in supply chain management in India that occurs when there needs to be more raw materials available for a company’s manufacturing process. This can mean that the company has to wait until more materials arrive, or they have to find another supplier who can provide them with what they need on short notice.
- Changing Consumer Attitudes
Changing consumer attitudes include increased demand for environmentally friendly products or greater awareness of human rights violations in overseas factories where certain products are produced. These changes can force companies to adapt their business practices to remain competitive in the marketplace and meet their customers’ needs.
To know why businesses are interested in blockchain technology, check out our blog article on how SCM uses the blockchain.
- Increasing freight prices
When a company’s supply chain is not functioning optimally, it can be challenging to keep up with the demand for its product. The increased freight costs are one of the main contributors to this problem.
This can happen in a few ways:
- Existing suppliers may raise their prices to keep up with demand if there is insufficient capacity on the market.
- If you’re already paying high shipping prices, it will be harder to maintain profit margins and stay competitive in your industry.
Restructuring is also one of the supply chain management risks and challenges many companies face today. It often involves outsourcing part or all of your production process overseas, which makes it more difficult to control quality standards and ensure compliance with local regulations and laws. These issues can lead to product recalls or other problems that can hurt customer satisfaction.
Want to know what’s trending in supply chain management? Check out our blog on SCM trends for more information.
- Difficult demand forecasting
One of the most extensive inventory management issues in healthcare supply chains faced by supply chain managers today is the difficult demand to forecast – especially regarding new products or services. This means they don’t always know how much inventory is needed at any given time because they need to know how many orders they’ll receive during specific periods (such as holidays).
- Port congestion
The biggest challenge for any supplier is trying to get their products into port. Ports are notoriously crowded and slow, so it can take weeks or even months before your shipment reaches its destination. This delay can be devastating if you’re looking to ship perishable goods.
Inflation is another massive issue with supply chains, especially regarding raw materials like metals and plastics. Prices can fluctuate wildly depending on market forces, so it’s essential for businesses that rely on these materials to be aware of trends to stay competitive in the marketplace.
Want to learn more about the relationship between supply chain management and operations management? Read our blog on SCM and operations for a deeper understanding.
How do companies overcome these challenges?
Here are many challenges of supply chain management many businesses face. To overcome it, you can:
- Work with a freight forwarder
Freight forwarders provide international shipping services to clients, allowing them to ship their goods without worrying about logistics. They also offer financing and warehousing services, allowing you to focus on your core business.
- Keep liquidity in your business.
Companies should have enough cash to meet their immediate needs and pay for inventory in the short term. This allows them to avoid financial issues that could cause delays in shipping or other problems with suppliers.
Want to know more about how supply chain engineering works? Check out our blog on how supply chain management help engineers.
- Identify alternative shipping ports.
If there are disruptions due to weather or other issues at one port—an earthquake or just too much snow—you should plan by identifying alternate ports where you can ship your goods instead of waiting for the port to reopen again.
- Supply chain audit
The next step in overcoming issues in supply chain management is conducting a supply chain audit. This will help you identify areas where you need to improve your system, and it can also give you insight into how your company compares with others in the industry.
- Adjust inventory policies to meet port-sensitive variants
If you have products shipped from overseas, this will be more challenging than domestically sourced ones. You’ll need to ensure that your inventory policies reflect the needs of these products and their customers.
- Improve supplier collaboration and focus on inventory management
When suppliers can work with their customers, both parties benefit from higher-quality products and lower costs associated with production and shipping.
Career prospects in Supply Chain Management
|Purchasing Agent||INR 10 LPA|
|Operations manager||INR 10 LPA|
|Logistics analyst||INR 5.5 LPA|
|Purchasing manager||INR 10 LPA|
|Supply chain manager||INR 13.1 LPA|
|Logistician||INR 7 LPA|
|Logistics manager||INR 6.5 LPA|
|Production, planning and expediting clerk||INR 4.6 LPA|
|Storage and distribution manager||INR 7.4 LPA|
There are many reasons to choose postgraduate certificate program in supply chain management available at Online Manipal. You can earn a certificate from a top-ranking Manipal Academy of Higher Education (MAHE), learn at your own pace, and connect with other students worldwide. The syllabus covers everything from advanced logistics to supply chain analytics. Enroll now!
- Supply chain management is a complex process requiring much planning and collaboration.
- Many factors influence supply chain management, such as materials, transportation, labor costs, etc.
- To succeed at supply chain management, you’ll need to ensure that all your partners work together effectively and efficiently.
- Supply chain management is essential because it helps businesses reduce waste and improve efficiency in their operations.
Information related to companies and external organizations is based on secondary research or the opinion of individual authors and must not be interpreted as the official information shared by the concerned organization.
Additionally, information like fee, eligibility, scholarships, finance options etc. on offerings and programs listed on Online Manipal may change as per the discretion of respective universities so please refer to the respective program page for latest information. Any information provided in blogs is not binding and cannot be taken as final.
Enroll with us
Interested to join our courses?
Share your details and we'll get back to you.
Explore our online programs to become future-readyKNOW MORE