Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Supply Chain — Challenges and How to Overcome Them

Key take-aways

  • Supply chain challenges are like speed bumps on the road that delay the delivery of products.
  • There are 20 common supply chain challenges procurement managers face spanning from demand forecasting to ethical concerns.
  • To resolve challenges, practical solutions like advanced technology for forecasting and strong supplier relationships should be implemented.

How do you overcome supply chain challenges?

Supply chains are the backbone of any business that connects products from suppliers to you. However, coursing through the complexities of supply chain management comes with its own set of challenges.

In this article, we’ll take a friendly walk-through of supply chain challenges, understand them, and explore how to tackle them with simple steps. 

Supply Chain Challenges & Solutions

Supply chain challenges are like speed bumps on the road that delay the delivery of products. They can be caused by unexpected events, communication hiccups, and not having the right plans in place.

Moreover, these challenges can slow down deliveries, increase costs, and make your customer unsatisfied.

Here are 20 common supply chain challenges:

1. Demand Forecasting

Have you ever tried guessing the weather? Well, guessing how much people will buy is just like that. One supply chain challenge is when demand suddenly changes. Fluctuating demand patterns often lead to either overstocking or stockouts. In the long run, this results in increased costs and lost sales opportunities.

Solution: Use advanced technology to gather data based on patterns and trends to make better guesses.

2. Supplier Issues

In the business world, suppliers sometimes get delayed, causing a ripple effect of delays in making end products. Not only that, but it also delays the entire supply chain rhythm.

Solution: Build relationships with your suppliers and collaborate with them to make contingency plans.

3. Inventory Imbalance

Keeping the right amount of stock is important. If you have too few, you won’t be able to cater to a huge number of customers. On the other hand, if you have too many, you won’t be able to sell them all. 

Solution: Use smart tools to help maintain the right balance. 

4. Transportation Troubles

Getting products from point A to B can be like solving a puzzle, especially since you have to figure out the fastest and cheapest way to move your things. Moreover, the puzzle only gets harder with traffic, weather, and other issues alike arise.

Solution: Use advanced technological tools and software to help you find the best routes for delivery and save cash.

5. Hidden Cost Surprise

Hidden costs like taxes or delays can suddenly pop up in your supply chain journey and disrupt your whole operation. These can be hard to avoid because they usually come in surprises you wouldn’t dare dream to experience.

Solution: Expect the worst-case scenarios and make contingency plans ahead of time.

6. Communication Confusion

Often, communication between you and your suppliers and across all of your departments may not be so efficient and chaos ensues. 

Solution: Clear communication is key. If possible, use only one communication platform.

7. Cost Conundrums

Managing costs and overall finances can feel like you’re juggling, and if you’re not a pro at it, chances are you’ll fail.

Solution: Multitask and make use of technology to keep costs in check and profits up.

8. Quality Quandaries

If your products are not up to par, you’re more likely to dissatisfy your customers.

Solution: Enforce better quality control to keep your customers happy and satisfied.

9. Regulation Rollercoaster

Economic rules and regulations are bendable and can often twist and turn. They are as unstable as the market itself.

Solution: Stay updated with trends and current news to avoid unnecessary surprises.

10. Data Dilemmas

Data overload is confusing. The simple human mind may not be able to comprehend all data insights and might have a hard time turning them into smarter decisions.

Solution: Use AI or any advanced technological tools to optimize insights.

11. Capacity Crunch

As you grow, you’re prone to bursting at the seams if you don’t rethink expanding and growing your capacity.

Solution: Think ahead and make sure to plan to have more capacity as your own company grows. 

12. Global Gridlock

If you’re an international business, international shipping can be a maze.

Solution: You must understand international laws and customs, especially to places you usually ship to.

13. Technology Tangles

Using old and outdated technology can’t keep you up in the modern world.

Solution: Embrace and adapt to new technology. It will make your work easier.

14. Talent Trouble

Finding skilled workers can be tough. Usually, you’ll find fresh graduates with zero to no little work experience. Although they can be skilled and be a great asset to your company, it is better to hire people with enough skillsets and experience to ensure smooth business operations.

Solution: Invest in training and retain top talent. It’s also important that you take good care of your employees so that they can take good care of you and your company too.

15. Lead Time Labyrinth

Long lead times can delay things. If you’re working with old technology or keep your operations working manually, it’s quite a disadvantage.

Solution: Streamline processes to speed things up. Keep up with how fast the world evolves.

16. Supply Chain Silos

If internal teams don’t talk, problems grow and relationships die. Thus, your whole supply chain may be in jeopardy if good communication is not integrated.

Solution: Foster collaboration and innovation for smoother business operations. Make sure your teams understand that they have to work together to streamline processes and contribute to the company’s bottom line.

17. Counterfeit Concerns

Fake and substandard products can diminish and ultimately ruin your reputation.

Solution: Tighten security to protect your brand. You can also sue brands or other companies that sell knock-off alternatives of your products, but you have to make sure that you have enough evidence and facts to back that up.

18. Ethical Entanglements

Ethical issues can arise at any moment, especially when you’re dealing with dishonest suppliers with a bad reputation.

Solution: It all boils down to finding and choosing the right suppliers and people involved in your business. Choose people with values that match yours.

19. Forecasting Fumbles

Predicting the future can be tricky, especially since you’re not a fortune-teller. You can’t predict what will happen for tomorrow’s weather or traffic or market trends.

Solution: Use past data and AI to make forecasts smarter based on their patterns.

20. Lack of Flexibility

If you’re not flexible unexpected changes may hurt you. Remember that economics is not stable and it fluctuates at all times.

Solution: Build agility into your supply chain for smoother transitions. Make contingency plans and make sure your products are timely and cannot be easily swayed when market trends change.

Impact of Efficient Supply Chain Management on Businesses

Once you understand the common supply chain challenges and keep in mind some strategies to overcome them, you’re more likely to achieve great supply chain management and improve your business operations.

Here are the five main impacts you should expect:

1. Enhanced Customer Satisfaction

This is your end goal. A well-managed supply chain ensures timely deliveries, great quality of products, and well-thought marketing strategies. This leads to increased customer satisfaction and loyalty.

2. Savings

Efficient supply chain management reduces excess inventory costs, minimizes transportation expenses, and optimizes operational efficiency. With that, you also avoid spending on unnecessary expenses.

3. Competitive Advantage

An agile and responsive supply chain enables you to quickly adapt to market changes and gives you a competitive edge. You can’t be easily swayed and stay resilient through economic downturns.

4. Innovation

Streamlined supply chains free up resources and allow you to focus on innovation or new product developments. You can invest your money and time to different areas.

5. Stakeholder Confidence

An effective supply chain instills confidence in stakeholders, including investors because it demonstrates your company’s operational excellence. It mirrors how well you handle instability and unexpected challenges.

Conclusion

Supply chain challenges might seem like hurdles you can’t go through, but in reality, they are more like puzzles waiting to be solved. Upon the implementation of great strategies and having the correct mindset, you’ll be able to see the art and the perfect approach to achieving a good supply chain management.

Moreover, you can view each challenge in lens that brings you closer to a more efficient, successful supply chain. These challenges are steps toward making your supply chain stronger and more resilient.

So, take a deep breath and get ready to conquer these challenges, one piece at a time to improve your overall business operations.

Frequentlyasked questions

How can businesses address fluctuating demand patterns in the supply chain?

Utilize advanced technology to gather and analyze data based on patterns and trends, enabling better demand forecasting.

What is the significance of fostering collaboration and innovation in the supply chain?

Internal teams must work together to streamline processes and contribute to the company’s bottom line, ensuring smoother business operations.

How can businesses protect their brand from counterfeit products in the supply chain?

Tighten security measures, and if necessary, take legal action against brands or companies selling knock-off alternatives, ensuring evidence and facts support the case.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics