Top 10 Supply Chain Problems to Overcome

Mounting supply chain problems pose a direct threat to the success of your organization. In recent years, international trade has been severely disrupted, first by the Covid-19 pandemic, and then by the Russian invasion of Ukraine. Attacks by regional militia groups have also made shipping through the Suez Canal unsafe. Suppliers fell into the crosshairs of cybercriminals, with a string of hacks triggering a demand for increased security and stricter contractual terms.

On average, supply chain problems cost companies $1.6 trillion in revenue each year. To protect their business, manufacturers and distributors must take measures to enhance their supply chain resilience and optimize their networks. This means looking at your entire supply chain ecosystem, from sourcing to delivery, and identifying potential vulnerabilities. Read on to discover what you need to know about the top ten most common supply chain problems and how to solve them.

Why Do Distributors and Manufacturers Face Supply Chain Problems?

Manufacturers and distributors are often uniquely vulnerable to supply chain disruptions due to complex supplier and buyer dependencies. Globalization has created opportunities for growth and affordability, but has increased the risks posed by region-specific issues. Changing consumer preferences, economic shifts, and seasonal trends create a highly dynamic environment where purchasing behavior is difficult to forecast, making it hard to know what parts and materials you will need.

Luckily, automation, the Internet of Things (IoT), and artificial intelligence (AI) are all radically transforming key supply chain processes like order tracking, demand forecasting, and inventory management. In this fast-paced environment, you need insights from real-time data analytics to succeed. With data-powered decision-making, you can respond accurately to changes in demand, manage inventory efficiently, and minimize downtime.

What Are the Top 10 Supply Chain Challenges, and How Can They Be Overcome?

The most common supply chain problems stem from inefficiencies, poor demand management, and disjointed supplier relationships. These can be overcome through strategic planning, best practice implementation, and technological integration.

Here are the top ten supply chain challenges and the practical solutions you can implement to overcome them:

1. Inefficient Processes
   
   Challenge: Slow processes, especially those relying on manual data entry, can lead to errors, delays, and employee dissatisfaction. Poor communication exacerbates these inefficiencies, leading to errors and delays.
   
   Solution: Automating data entry and standardizing processes across the supply chain can dramatically improve efficiency and reduce errors. For example, legacy email order processing often results in a 9-hour order queue and requires tiresome manual data entry. However, by using an AI-powered automation solution like Conexiom, you can automatically process complex, PO-backed emailed orders with 100% accuracy and reduce the inefficiencies in your supply chain.
   
   
2. Supply Chain Disruptions
   
   Challenge: As we’ve all experienced, supply chains are highly vulnerable to disruptions from natural disasters, global pandemics, conflict, and political instability. Supplier reliability is often inconsistent, further increasing the risk of interruptions.
   
   Solution: Diversification and contingency plans are key to building supply chain resilience. Create plans for alternative sources and develop backup routes to ensure business continuity even during disruptions. Also, consider maintaining strategic inventory buffers so that you have enough reserves to absorb short-term disruptions without halting production or service.
   
   
3. Demand Forecasting Errors
   
   Challenge: Inaccurate demand forecasting, whether due to overestimating or underestimating customer needs, can lead to significant operational inefficiencies. Seasonal variability adds another layer of complexity.
   
   Solution: Start by using advanced forecasting tools to analyze historical sales data. This can provide the insights you need to make more accurate demand forecasts. Also, be sure to collaborate with your sales and marketing teams to incorporate market trends and promotional plans into your forecasts.
   
   
4. Inventory Management Challenges
   
   Challenge: Poor inventory management can lead to either excess inventory or stockouts, both of which are costly and disruptive. A lack of real-time inventory visibility further complicates effective management.
   
   Solution: Implementing just-in-time inventory practices, coupled with management software that offers real-time visibility, can greatly enhance inventory control and reduce management problems. Conduct regular inventory audits to maintain accuracy. Use barcoding or RFID tags to track inventory movements more precisely and reduce manual counting errors.
   
   
5. Logistics and Transportation Issues
   
   Challenge: Rising transportation costs, delivery delays, and inefficient routing are all common supply chain challenges that increase costs and reduce customer satisfaction.
   
   Solution: Optimize your delivery routes using software and technology. Negotiate better shipping rates with carriers by consolidating shipments or using freight brokers who can secure bulk discounts. Implement digital order processing systems to ensure all shipments are accurate and on time, reducing the need for costly re-shipments.
   
   
6. Supplier and Vendor Management
   
   Challenge: Supplier reliability and quality control are critical to maintaining consistent supply chain operations. Inconsistent vendor performance can disrupt production and affect product quality.
   
   Solution: Build a supplier evaluation checklist that includes criteria such as on-time delivery, product quality, and communication. Use this checklist to regularly assess your vendors and address any issues proactively. Diversify your suppliers by finding backups for each critical part or material. Finally, clear contracts with performance metrics should be established to ensure accountability.
   
   
7. Compliance and Regulatory Issues
   
   Challenge: Keeping up with changing regulations and ensuring compliance is complex and time-consuming, risking costly delays and fines.
   
   Solution: Stay informed and adapt promptly to regulatory changes, ensuring proper documentation automation practices are in place. Set up a compliance calendar with key dates and deadlines to ensure timely submissions. Also, regular internal audits should be conducted to ensure ongoing compliance and avoid last-minute surprises.
   
   
8. Technology Integration and Adoption
   
   Challenge: Many manufacturers and distributors rely on legacy technologies and fragmented data systems that can be inefficient and provide poor visibility across the supply chain. Resistance to change can slow the adoption of new technologies.
   
   Solution: When it comes to technology integration and adoption, start small and focus on building confidence before rolling out larger changes. Provide plenty of training to your team so that they are familiar with new systems and understand how these tools will make their jobs easier, not replace them. When ready, upgrade to modern systems that offer cloud-based solutions to eliminate data silos and ensure that all departments have what they need to work better and faster.
   
   
9. Customer Expectations and Satisfaction
   
   Challenge: Meeting increasing customer demands for faster, more accurate service is difficult, especially when order accuracy and on-time delivery are at stake.
   
   Solution: Implement reliable logistics solutions and enhance order processing accuracy to meet customer expectations. Order processing platforms like Conexiom reduce the risk of errors and delays, as well as create a more positive, efficient process for your customers. A final crucial strategy for understanding and meeting customer expectations is gathering customer feedback. Use surveys and follow-up emails to identify areas for improvement.
   
   
10. Scalability and Growth
    
    Challenge: A final supply chain problem is scalability. As businesses grow, capacity constraints and the need for flexible operations can lead to inefficiencies and increased costs, threatening sustainable growth.
    
    Solution: Start by incrementally expanding your capacity by adding flexible resources, such as temporary storage or additional shifts during peak times. Optimize resource usage by applying project management tools to streamline operations. Implement scalable processes by deploying cloud-based software that can grow with your business. Regularly review your growth strategy and adjust your operations to maintain efficiency as you scale.

Revere Electric Supply Co. was one company that experienced many of these problems firsthand. As they grew, their order processing became gradually more complex, with some orders coming through EDI, email, fax, and their eCommerce site. Each order required 20-30 minutes or more of manual data entry, slowing their processes and increasing the risk of manual error. With Conexiom, they were able to accelerate order cycle times, eliminate costly returns, and save 95% of the time they used to spend entering orders. This shows just how important technology is to overcoming supply chain woes.

How Conexiom Can Help Overcome Supply Chain Problems

Supply chain challenges range from process inefficiencies to geopolitical turmoil. The modern manufacturing or distribution company supply chain is highly complex and interdependent on a range of different supply partners. The key to navigating supply chain challenges is automation through powerful technological solutions.

Conexiom specializes in automating key aspects of supply chain management, including Sales Order Automation, Invoice Processing, and Vendor Order Acknowledgements. These solutions streamline and enhance the efficiency of your operations, helping you address and overcome common supply chain problems more rapidly.

Conexiom offers:

Book a personalized demo today to see how Conexiom's Sales Order Automation, Invoice Processing, and Vendor Order Acknowledgments can help your supply chain.