This is a guest post from Unleashed Software.
Unleashed Software is a powerful cloud-based inventory management tool that allows businesses to accurately manage their inventory in real-time. Unleashed allows you to easily and accurately track stock in real-time across various locations for visibility on all inventory management processes and transactions. With such dynamic inventory information, businesses are able to make better data-driven business decisions.
The manufacturing supply chain can be simple or complex, depending on the company and the product. However, one common denominator remains: It is often wrought with challenges.
The supply chain involves every link in the process from the growth, procurement, or manufacture of the raw materials all the way to the finished product being placed in the customer’s hands.
It is imperative to understand some of the challenges of manufacturing and supply chain management in order to rise above them and successfully keep the chain functioning. This article considers some of the common challenges businesses face.
The customer is always right
This is a common adage adopted by retailers when training their staff, and it does hold some gravity in teaching customer service. However, it wreaks havoc for supply chain management. Because sometimes customer demands are simply unreasonable, and even if they are possible, they may require a lot of time and tweaking of the supply chain to accommodate them.
A well-functioning supply chain operates methodically. Altering any step to try and push through customer orders can jeopardise things downstream. It may require a bit of give and take — and a great deal of tact and patience — to see to customer demand while still maintaining the integrity of the whole chain.
It is a small world
Globalization is here to stay in Western culture, and it provides both benefits and challenges for the supply chain. Having access to suppliers across the world who may offer products at reduced prices is beneficial and can increase the profit margin.
However, the downside is that every other competitor does the same. So, if a customer is after the cheapest product, and your company prefers to source locally, you may well be pushed out of the market as the competitors who utilise global suppliers would be able to provide a more cost-effective product.
Another drawback to sourcing product from around the world is the need for reliable shipping. This not only creates an element of added risk, but also it costs more and requires time, which adds to the lead time. This means accurate predictions for ordering need to be available farther into the future and thus will likely be more inaccurate than previously.
All these challenges can certainly be managed however.
Rising costs, reduced price expectations
We have touched on it previously, but a global supply chain can get very complicated very fast: different suppliers, time zones, currencies, levels of product quality and shipping companies. These variables, particularly changing currencies and freight fees, can result in rising operating costs that are not always passed on to the customer. This creates a shortfall that the company must cover and can eat into profit margins.
If, in fact, these costs are passed on to the customer, there is always a risk they could find a cheaper supplier, which would cost the company the sale and profit anyway.
It is a challenge ascertaining what to do for the business in terms of pricing and retention of the customer base.
Communication and relationships
A large part of supply chain management is connecting with all the different links in the chain — suppliers, manufacturers, shipping companies — and ensuring each understands their role in the chain, fulfils their role in a timely manner and respects and communicates effectively with the other members.
This sounds like a great theory, but in practice it can be difficult due to different time zones, languages and expectations. Thus, it is important to place time, effort, and consideration on the business relationships so that every member aligns their goals and practices to achieve the same optimal result.
In reality, this might be showing appreciation for good work through discounts or providing clear orders and lead times that are in writing and easy to interpret.
It might require a bit of creativity to overcome these challenges, but working with every part of the supply chain can ensure its success.