Supply chain challenges are unavoidable. However, there are ways to reduce the impact they have on your operations. Being aware of the challenges your organization may come up against, when they are likely to arise and what you can do to combat them gives you a greater chance of keeping your supply chain running smoothly.
These are some of the most common challenges that organizations are facing today, and how to manage them effectively using technology and practices such as process automation, machine learning, and artificial intelligence.
Costs are rising across the entire supply chain. Sourcing and procurement prices are on the rise as sourcing raw materials has become more costly. This increase has been caused by material scarcity and the need to source more environmentally-friendly materials to deliver on sustainability promises.
The cost of necessities such as labor are also rising due to a retiring workforce and a lack of new workers with the right skills driving up wages, while increasing warehousing costs, capacity limitations and rising fuel costs have driven up the price of logistics. Speaking of fuel - soaring energy costs are also impacting bottom lines as it is becoming more expensive to run factories and office spaces on a day-to-day basis.
How to manage increasing costs
Avoid single-sourcing. Despite the potential for economies of scale, relying on one supplier can put you at risk of price increases whereas having multiple suppliers can increase the competitiveness of supplier pricing as well as your bargaining power. Avoid stockpiling as this increases warehousing costs and can lead to obsolete stock. Invest in technology to reduce labor costs – automating time-consuming manual tasks will allow you to scale up production without additional headcount and free up employees to complete higher-value work.
Changing trends, seasons and consumer behavior can all affect demand, and the constant fluctuations can cause numerous challenges within the supply chain. In times of high demand, it is essential to have enough stock to meet customer needs as failing to do so can result in them switching to a competitor and influencing others to do so too. However, when demand dips, it is in the best interest of the business to avoid overstocking as the storage and administration costs associated with excess stock can damage profits.
How to ride out fluctuations in demand
The best way to deal with fluctuating demand is to be prepared for it (or as prepared as possible). Using the data analytics and machine learning capabilities within a low-code platform to increase the accuracy of forecasting and being aware of any factors that will influence future demand can help you plan for the various ups and downs. Predictive analytics allows you to use historical sales data to anticipate future demand. You can communicate this to your suppliers within the platform to avoid long lead times at times of high demand and eliminate excess when demand is low, preserving customer loyalty and profits.
Keeping up with the increasing number of regulations across the globe is essential to avoid fines and any damage to brand reputation. Organizations must remain informed of and adhere to the latest rules and restrictions on imports and exports, health and safety regulations and quality assurance measures to ensure that they can do business in certain markets.
How to ensure regulations are always met
Integrate systems and automate processes to increase transparency and enable the agility to react to any changes in regulation promptly to avoid fines, identify areas of risk for non-compliance and the measures that can be put in place to ensure that certain rules are followed and compliance is the standard.
Process automation in action: Unilever International run a global operation that exports goods to multiple countries, all with unique rules and costs for imports and shipping. It’s essential for their day-to-day operations to ensure that the correct paperwork and costings are applied to each shipment to meet regulations. To achieve this, they automated their Customer Shipping Information process, which previously relied on Excel spreadsheets shared over email. Now over 170 fields of customer shipping information data are automatically updated, with triggered approvals sent to senior staff to ensure cases meet company policies. Cases previously took up to two months to complete, and now 87% of cases are completed within a month of submission.
Creating a sustainable supply chain is key to meeting ESG requirements and promoting a positive brand reputation. Environmental awareness and the desire to protect the planet have led to consumers and other stakeholders expecting a certain level of environmental sustainability from supply chain operations. Therefore, it is more important than ever to be aware of and monitor your organization’s carbon footprint, while also being transparent about your impact. Social sustainability is also of utmost importance, fair pay and employee well-being are crucial for an organization to be considered favorably among those internally and externally.
How to achieve sustainability
Sustainability is an organization-wide effort. It is vital that everyone across the enterprise is aware of what sustainability means. Creating a sustainability framework to communicate sustainability standards to stakeholders will ensure everyone is striving towards the same sustainability goals. Setting sustainability targets and collaborating with suppliers to assess the impact and risks associated with operations and put measures in place to govern these will also ensure that all aspects of your supply chain are meeting your specified sustainability standards.
One of the biggest technological problems in supply chain management is the gaps in processes caused by the vast number of disconnected systems employed to carry them out. This causes a lack of visibility and performance data, which makes it difficult to determine which areas are performing well and how to make right decision to reach the desired outcome. When technology is running in silos, this often means that your employees are siloed as well, which does not lay a good foundation for collaboration and cohesive working.
How to integrate your technology
Adopt a platform that allows you to connect processes, people, systems, data and AI (Artificial Intelligence) to increase transparency and efficiency of supply chain activities. Integrating processes from end-to-end fosters collaboration between co-workers and ensures that each step within a process is completed and progresses to the next stage, accelerating completion. Managing supply chain processes within one system gives you greater visibility of your operations and allows you to make agile changes in response to any challenges that arise.
All of the challenges above can be addressed with various technologies, but a process automation platform can provide a solid foundation for building your solutions on a single platform.
But before you start automating, map your current processes and use simulation to test various scenarios on your platform. This will give you a better idea of how you can alter operations and capacity to respond to challenges, ensuring supply chain resiliency.
Want to learn more about how process automation can help you address challenges within your supply chain?
