By the first quarter of 2022, most companies hoped pandemic-related supply chain disruptions would be a distant memory. But new complications arose: port congestion, raw material shortages, labor challenges, inflation, and an ongoing war in Ukraine led to bottlenecks in every link of the chain over air, sea, and land. At the same time, climate change caused the threat of natural disasters to loom ever closer. As a supply chain leader, you may have to adapt quickly by the day, or even by the minute, to navigate uncharted territory. Here are key strategies to help you stay on top in the coming year — no matter what arises.
Top Supply Chain Challenges
Research suggests supply chain issues will continue to affect supply chain operations through 2023. There was a shortage of over 80,000 truck drivers in the United States in 2021, and that number could reach 160,000 by 2030. This scarcity is having a strong effect on retailers.
Similarly, a lack of warehouse space prevents retailers from meeting consumers’ expectations. Warehouses are already overflowing; there is no more available space to fill. The only solution to rising consumer demand seems to be acquiring new warehouses, which is expensive. Real estate prices have skyrocketed due to competition from other industries for the land and building supplies needed.
Furthermore, since the pandemic began, online shopping has trended upward. Consumers expect more items from retailers, and they expect them promptly. However, this stretch on the supply chain will likely reduce retailers’ abilities to keep up with customer expectations. All of this presents you with problems in the coming year.
How to Stay on Top of Today’s Biggest Supply Chain Challenges
Short-Term:
- Leverage near-term trends and patterns.
Given the constant upheavals of recent years, accurate, effective demand planning has become a top priority for businesses worldwide. With proper supply chain planning, you can sense demand for the near term, taking into account real-time market fluctuations. This helps you accurately plan and forecast demand, keep your expectations realistic, and ensure the right amount of product is available in the right place and at the right time.
Over- and under-ordering, producing, stocking, and spending have led to the unimaginable wastage of material, free cash flow, and sustainability in businesses across the world for decades. By identifying a roadmap of top-priority products based on sales and margins, you can quickly rectify and effectively accelerate your bottom line, thus driving a sustained market advantage. You can effectively save costs by leveraging optimized production, product mix, material movement, inventory management, and asset utilization.
Long-Term:
- Fine-tune your forecasting.
Of course, you can’t predict the future, but you can closely monitor your flagship products and track their prices, delivery times, and other factors. For example, if the price of a key product suddenly goes up, that could mean that a supplier is having trouble delivering. Determining when and why suppliers are struggling can be important for the early identification of disruptions in your supply chain. Don’t wait for critical products to stop showing up at your door or until prices soar sky-high.
If a particular supplier is giving you trouble, can you switch suppliers? Maybe shift from an overseas manufacturer to one that’s closer to home? If you can’t source one manufacturing component, are there any alternatives you can look into? Taking variables like shipping time into account when considering your supply options may help you choose the best choice for your business. For example, transportation costs from Southeast Asian markets have been increasing over the last few years, but a supplier in Central America could be an affordable alternative.
5 Supply-Chain Strategies to Keep Your Business Relevant
- Use accurate forecasting.
Correct forecasting can help you anticipate changes in customer demand so you can determine how much inventory you should have. Maintain close communication with your customers to understand their current needs and wants. Be willing to adjust your offerings as needed to keep up with changes in the marketplace. Meanwhile, keep a close eye on your competition and what they are doing to stay ahead of the curve.
- Invest in artificial intelligence and other technology.
Implement artificial intelligence solutions and advanced analytics to make data-driven decisions. This can include tools that offer real-time insight into your inventory levels, orders, and supplier performance. Knowing this information can help you avoid the worst supply chain volatility.
- Understand supply chain challenges and how they affect you.
Supply chain management is about more than just sourcing raw materials. It’s about understanding and optimizing all the processes in between. That’s why it’s important to utilize existing data, analytics, and modeling tools to analyze your supply chain operations and identify areas of risk and potential improvement opportunities. Look for ways to optimize processes, reduce waste, and improve efficiency across the board.
- Reevaluate your inventory location.
Consider where your inventory is located. Does it make sense to move it closer to your customers? If not, think about other ways to optimize your supply chain and distribution processes to stay ahead of the curve.
- Make contingency plans.
Always prepare for unexpected disruptions or crises by having plans to keep operations running even if something goes wrong. For example, how long can you hold out if you can’t move your product due to a disruption? Do you have a line of credit so you can secure a cash flow or get a short-term loan? How many customers can you afford to lose if you can’t sell a key product? Whether it’s dealing with natural disasters, labor strikes, regulatory issues, or any other problem that might arise, be prepared to take swift action to mitigate the impact on your bottom line and reputation.
Above all, stay focused on continuous improvement, whether that’s leveraging new technologies or finding creative solutions to today’s enormous challenges. The demanding supply chain landscape requires constant evolution and adaptation. Still, with careful planning and a willingness to take risks, you can ensure that your business remains competitive for years to come.
Author Bio
Anita Raj is a seasoned technology thought leader and product marketing expert for building impactful go-to-market strategies for targeted markets such as Europe, the U.K., and the U.S. She is the vice president of product marketing at ThroughPut Inc., responsible for the vision, strategy, and execution of go-to-market and product marketing initiatives, including value proposition, product launches, customer marketing, and product life cycle marketing.
