Major Issues Facing Supply Chain Managers

What are the major issues facing supply chain managers and how does it affect the companies they work for?

Supply chain managers face issues on a daily basis, and almost all require direct attention and a quick response. These problems can vary in severity and complexity. Just like there are many correct ways to solve supply chain issues, there are varying degrees of severity and complexity in supply chain problems. 

Year-on-year, Supply Chain Managers face ever-increasing issues. And with such importance placed on stable and reliable supply chains today, these issues are now top of mind. After all, supply chains lie at the core of successful business operations, and issues will undoubtedly impact a business’s bottom line.

Here are some of the bigger issues that affect supply chain managers.

1. Managing customer expectations

Supply Chain Managers are a service provider. They provide services for indirect procurement requests, project/manufacturing requests, and outside customer requests. Consequently, the Supply Chain Manager needs to deploy efficient workflows to make sure requests are fulfilled on time, every time.

When efficiency is business priority number one, Supply Chain Managers can begin to deliver on customer expectations. For example, you can receive information in a fast and accurate manner and see through the timely fulfillment of resourcing, planning, sourcing, and shipping. 

To correctly manage these expectations, though, requires the right tools. You must use appropriate spend control software and, of course, maintain transparent communication with customers. 

With the right spend management platform, you can enter requests and approve orders from under one roof, and without needing to instigate a follow-up with the requester (which will delay orders). Ultimately, this gives you supply chain visibility and lets everyone, not just yourself, track orders through to invoice payment. 

2. Managing suppliers

Along with managing customer expectations comes managing suppliers. In an ideal world, you’ll proactively engage with suppliers through Supplier Relationship Management

It’s up to you to know how many suppliers are needed, how to handle delays, and how to receive orders. And each step requires clear thinking and a unique process that slots in with your business’s overall spend culture. On top of these duties, you’re also responsible for finding suppliers with consistent and reliable service, and at a price that doesn’t hurt your bottom line.

But here’s the thing: there is always a supplier that ends up experiencing issues. To resolve these challenges quickly, you need access to reliable data at a moment’s notice. This way, you can catch scheduling, quality, and delivery issues before they occur and proactively engage with suppliers about problems to align their expectations. 

3. Maintaining quality and sustainability

The globalization of supply chains brings concerns about the quality and sustainability of products that are made in other countries. This is particularly true when components of a product need to meet regulatory standards. 

Quality is a critical factor in maintaining your company’s reputation. It also ensures the materials you receive meet the specifications requested and that they’re fit for purpose. In addition, you need to ensure ethical sourcing and do your part to reduce your impact on the environment. 

In short, you’re responsible for ensuring suppliers and their products maintain environmental and quality standards. To do this effectively in today’s globalized supply chain, you’ll need a tool to assist you. For example, third-party inspection services and software tools are designed to collect and monitor supplier safety and environmental information.

4. Access to data

In a modern-day supply chain, access to your supply chain data is one of the most important requirements. Without this, you can’t begin to make educated improvements to your supply chain or reduce risk. 

Some common metric to improve supply chain efficiency include:

  • Cycle time: request-to-approval, approval-to-purchase order, invoicing-to-invoice payment.
  • Consolidation of items/vendors: a common area for identifying cost savings and reducing the number of suppliers to manage.
  • On-time delivery reporting: knowing which orders are outstanding both from a finance perspective and a supplier delivery management perspective.
  • Budgetary controls: ensuring spending occurs within budgeted amounts.

Having a tool in place that captures these metrics helps you better manage your company spend and improves your reporting. It’ll also assist you when it comes to risk mitigation. 

5. Risk mitigation

Today, you’re a key stakeholder in mitigating business risk. While risk is a broad topic, there are some common supply chain risks that supply chain managers should keep top of mind. These include:

  • Reliance on one supplier for most of your purchases: companies that are too reliant on one supplier are vulnerable if that supplier can’t meet demands. Be sure to diversify your supply chain as much as possible to ensure business continuity.
  • Failure to prepare for force majeure events: These became very real when COVID-19 started affecting the delivery of goods and services globally. Do you have a backup plan?
  • Tracking supply data on spreadsheets or outdated technology: Losing your supply chain data due to corrupt servers or damaged computers is disastrous to ongoing operations.
  • Controlling escalating costs: do you know how much you’ve spent in the past? Can you forecast what you’ll spend in the future? Is there a critical cost commodity in your product that can be hedged? This knowledge is critical when it comes to negotiating costs with suppliers.
  • Accommodating multiple changes in channels to market: ensuring your supply chain gets the right goods to the right place at the right time is critical to the success of any organization.
  • Managing inventory: inventory is expensive to procure, expensive to sit on, and, in the worst-case scenario, expensive to write off.

The key to managing and mitigating risk is through good planning. Spending the time to identify, quantify, and create mitigations is a great first step to reducing your supply chain risk. 

The ever-increasing complexity of supply chain management

Supply chain managers have a complex job, and this job is getting more complex every day. A well-executed and efficient supply chain can create a huge competitive advantage for a company. 

When supply chain managers factor in all the risks inherent to their supply chain and ensure the company has the best quality supplies at the right price, you can begin to reap the rewards and unlock growth. 

With enough knowledge and the right spend management tools, you can mitigate many critical risks in one fell swoop. And when a company’s supply chain management operates smoothly, you can become your company’s unsung hero.

If you want to learn more about building a successful remote supply chain process, check out this quick guide:

Editor's note:
Original publish date: 10 June 2015
Original author: Nick Boariu

What do you think?

Leave a Comment