10 Not possible Challenges to Tackle in Supply Chain Management

Supply chain management in 2020 was severely challenged by the COVID-19 outbreak. Although select segments of some production flows saw improvement in 2021, your complete process still faces seemingly not possible challenges. We’ll take a look at a number of of those challenges to provide chain management all businesses will wrestle with, from the acquisition of basic materials, the transformation into goods and services, and the delivery to finish consumers.

As businesses proceed to adapt to the post-COVID-19 breakout era by adding supply chain redundancy (finding multiple suppliers of the identical item to function backups in case the first supplier is by some means compromised), further embracing digital transformation, and holding greater inventory, they are going to meet potentially drastic changes in each upstream and downstream supply chains. 

Certainly one of the challenges in supply chain management to beat is inflation. Inflation each causes and is attributable to slow-downs in the availability chain. Though the Federal Reserve has set a goal of two percent for inflation, rates for the preceding 12 months were seven percent in February 2021 and seven.9 percent in February 2022. Demand was up in 2021, contributing to port congestion and delivery slow-downs, which led to a rise in prices. Supply was down in 2021 because of the continuing challenges in global supply chain management, including labor shortages and increased prices. 

Having people clamoring for more of your services would normally be seen as a great thing. But this increase in demand became an excessive amount of of a great thing in 2021 when demand for a lot of goods and services, particularly durable goods, increased. Increased demand for services means a rise in competition for raw materials, causing potential disruptions in supply chains. 

Whether the raw materials of your far-upstream supply chain are relatively rare (lithium, palladium, gold, etc.) or are relatively common (quartzite, copper, steel, etc.), raw material providers have only recently returned to pre-pandemic levels of output and are struggling to satisfy the increased demands of 2022. While some raw materials are beginning to return to pre-pandemic production levels, others are usually not. 

About half of the world’s semiconductor-grade neon is produced by two firms in Ukraine. Faced with increasing civilian deaths and infrastructure damage attributable to Russian shelling of Ukrainian cities, each Ukrainian firms have ceased operations. Were the Russian violence to finish soon, it’s doubtful production would return to pre-invasion levels any time soon. Faced with uncertain computer hardware supplies in 2022, many small- and medium-sized businesses are bypassing some challenges in supply chain management with regard to their hosting by turning from a CapEx-funded on-premises infrastructure to hosted infrastructure. 

Related to (and stemming from) the problems with raw materials, we face a worldwide chip shortage. From automotive to MedTech, every sector is feeling the pains of the present silicon chip shortage. With demand for chips expected to double inside the subsequent five years, the shortage is predicted to persist and can affect PC and server infrastructure for a while to return. For eCommerce, turning to cloud computing might be an excellent method to reduce costs by only paying for server resources as they’re used.

Already beleaguered by pandemic-driven chronic congestion, U.S. ports on the west coast are expected to see union-led work slowdowns as contract renegotiations occur. Along with labor issues, some ports, most notably the port of Los Angeles, proceed to lag behind in much-needed digitization efforts, resulting in more challenges in supply chain management.

Every sector of the economy has been hit with pandemic-related labor shortages. In developed markets, many older, upper-income employees voluntarily selected early retirement. In emerging markets, most notably China and India, lockdown restrictions led to job elimination and wage reduction, causing expert migrant employees to maneuver back to their respective provinces and states. As future uncertainty fades, these trends are expected to reverse somewhat.

JIT (just-in-time) inventory management is a technique of managing your inventory in such a way that what you would like, from raw materials to finished products, is accessible to you simply before you would like it. Even should you aren’t using JIT now, at the least a few of your upstream providers and suppliers definitely are.

Pre-COVID-19 breakout, many supply chain managers swore by just-in-time inventory management as a way to each reduce costs and increase efficiency. Post-Covid-19 breakout, it’s now clear to all that this approach is incredibly vulnerable to systemic shock. Suppliers can’t forecast lead times, producers can’t forecast market demand, and transporters can’t forecast delivery dates. Supply chain managers now struggle to refactor their strategies, designs, and dependencies, all with an eye fixed on improving supply chain resilience. This takes time to work out, and until the dust settles, just-in-time inventory management is all too often too-darned-late.

Certainly one of the most important challenges in supply chain management is storage capability constraints. Though supply chain managers would really like to extend held inventory of materials and product supply, available warehouse space is proscribed, and acquisition of recent space might be each timely and expensive. For eCommerce businesses, dropshipping or third-party logistics (3PL) will help with onsite storage capability constraints. Hosting in a cloud computing environment allows eCommerce sites to skip the step of shopping for and establishing all of the hardware and software required to self-host, a step made far more difficult and time-consuming by material shortages.

Though customers are returning to in-store and on-site purchases, customer demand for staple items has shifted somewhat to last-mile delivery slightly than in-store pickup. Initially, customers within the early days of the pandemic desired delivery for reasons of safety; now, customers requesting delivery are increasingly citing convenience as their major motivation. Though the gig economy–counting on freelance employees under short-term contracts–helped with the demand for delivery through the initial pandemic response, businesses are actually on the lookout for more profitable, longer-term solutions.

The challenges in supply chain management attributable to this ongoing Great Supply Chain Disruption are expected to last for the foreseeable future. Businesses that consolidate their hosting infrastructure shall be higher capable of make good use of the opportunities these challenges will uncover.