A supply chain consists of the interconnected networks that make up the finished products that customers purchase. For instance, in the automobile industry, before you buy a car, iron extracted from the earth is required; the ore is then transported to a plant where it gets turned into steel that is made into the automobile chassis.
A lot of components, including engines, batteries, and electrical components, are wired, and many more need to be assembled to make the car. Then once it's made, it will be sold to wholesale and retail companies before reaching the end user.
Overall, the whole supply chain consists of producers that make or grow the raw materials, vendors that buy and sell the materials to manufacturers, transporters that move the goods around the world, supply chain managers that ensure everything is running smoothly, retailers that sell the goods online and offline, and consumers that are the end users who purchase the goods and services.
Supply Chain Disruption
Whenever any of the supply links fail to work properly, you will hear people saying the supply chain has been disrupted. That means issues have emerged. For example, an increase in the cost structure of raw materials compared to the price of last year can greatly implicate the company's cost structure. Another scenario is labor market mismatches, which can affect operations.
For instance, logistics companies can't find enough drivers to deliver goods and services. There are around five areas in which you will notice disruption in the supply chain, including in planning and supply networks, transport and logistics systems, financial resiliency, product complexity, and organizational maturity. Now with this understanding, let's look at some of the challenges faced by supply chain management due to digitalization.
Supply Chain Management Challenges for Modern Businesses
The supply chain consists of many moving parts that have to work cohesively and be managed. Overall, you can say this is a complex process. But still, we are in the digital era where the need for adaptability is highly important. In fact, companies either adapt to the changes or perish. Some of the challenges that supply chain management faces due to digitalization include
- Globalization
Although globalization is a broad concept, there are still some challenges in this management. For example, while supply chain management firms tend to drive globalized online marketing via companies like Clickfunnels for cost efficiency, they might take additional initiatives like moving their operations to countries or regions where labor and taxes are more affordable, along with cost-effective materials and transportation.
Most times, companies, for instance, automobiles, outsource the production of various parts and components to different countries. This helps expand the procurement network and complicates the whole chain; this will leave the companies to shoulder the manufacturing, storage, and logistics by themselves across different borders.
You have to go through all this while still making sure you maintain an acceptable delivery speed for the end users and real-time visibility in the production circle.
- Competition
Competition is another challenge that supply chain management faces and this is always increasing. Today the barrier to entry in many industries is low compared to how they were many years ago.
With everything advancing, it's now very easy for new companies to develop and even threaten the current market share that is already established by other organizations. This is because these new companies embrace innovation, which produces the same result with better efficiency and at a lower price.
Competition is always a great concern for this sector. However, if existing companies can start to look at this competition through a new lens, they can leverage effective management as a way to get ahead. Now, how can you use this competition to your advantage?
First, you need to look at your supply chain as a value chain and focus on these six important principles. First, instead of focusing on the competition, focus on collaboration.
Your eyes should always be on the big picture goal, and you should understand the complexity but focus on the simplicity. Treat the root cause of the problem, not just the symptoms, and focus on cost drivers and business impacts. Pursue any growth idea to the best of your ability.
Visit here: https://www.indeed.com/career-advice/career-development/supply-chain-management to learn more about how supply chain management works.
- Technology Adoption and Other Resource Utilization
You can easily find yourself getting distracted by shiny new objects; this is an obvious challenge in many industries, and supply chain management is not an exception. When you plan to implement technology, you should always be clear about the benefits to your industry.
For instance, you may come across something that will simplify the process of improving visibility, enhancing efficiency, and reducing cost. But before you venture into this, you should be clear about the ROI.
This being said, you may be tempted to jump on the latest technology due to the fear of missing out, but think about what. If you invest in the latest technology and you opt out, you will leave your competitors with an advantage.
No doubt, investing in different technologies can simplify your business. In fact, some of them are crucial for the efficiency and effectiveness of your operations. However, one wrong move or investing in the wrong technology can greatly impact your activities. That's why you should thoroughly consider before making a decision.
Click here to learn more about the advanced supply chain technologies in manufacturing.
Conclusion
The supply chain is a complex network that involves different sectors. Regardless of the industry you decide to venture into, you will, one way or the other, have to be in one sector, not the one handling the whole activity.
However, one unarguable fact is that people in this management tend to face challenges with digitalization, including globalization, technology adoption, and competition. If you want to stand ahead of this competition, there is a need to adopt the advancement as long as you understand it's beneficial to your company and the way forward.
