Part I: Why Global Supply Chains of Today Might Fail the Stress-Test?
7/25/2023 · 07/25/2023 · 4 min read
… and how they already did
Photo by s_kawee on EnvatoElements
COVID-19 pandemic was not only a stress-test but also a much needed rude awakening for businesses when it came to the resilience of their supply chains. In fact, the forced quarantine time revealed how most organizations were unprepared to deal with such large scale challenges and how the global supply chains were managed inefficiently so far.
However, what Supply Chain Inefficiency actually entails?
In this and the next articles, we’ve collected for you all of the challenges experienced by Global Supply Chains in 2022 and onwards and how they impacted businesses.
What Causes the Inefficient Management of Supply Chain?
You would be surprised to know how many companies give little thought about their supply chains.
Photo by i ♥ happy!! on Wikimedia commons
In fact, poor supply chain management has always been a persistent issue, causing delays and longer lead times that businesses and industries have to confront on a day-to-day basis. Yet surprisingly, not all companies looked behind the reasons for these delays, at least not until the pandemic came around.
The challenges for management encompass a wide array of problems, starting from lack of protection against cyberattacks to inventory management issues, delays from manual processes, demand forecasting issues, and finishing with the lack of real-time data for decision-making.
Lack of Protection Against Cyberattacks
In today’s digital age, supply chains are highly interconnected, storing data in one place and establishing communication between tiers through the use of advanced technology and networks. This, however, exposes businesses to cyber threats and attacks..
Aside from common data breaches, supply chain attacks, in particular, are becoming more common. Hackers target a trusted third-party vendor of a company, presumably their weakest link in the supply chain with access to an organization’s systems and data. According to the Bulletproof Annual Cyber Security Industry Report 2022, about 40% of cyberthreats occur indirectly through the supply chain.
What’s even more alarming,
Inventory Management or Lack of Thereof
Poor inventory planning and management is another thing that plagues businesses. Inefficient inventory management can lead to stockouts or overstock situations, both of which are detrimental to a company’s bottom line. Striking the right balance between demand and supply is crucial to avoid lost sales opportunities and excess carrying costs.
However, some companies still do not keep track of their assets or use outdated methods that lead to a variety of errors or risks:
And when it comes to small businesses only:
Inefficient assets management can have a significant impact on any business’s ability to be able to conduct business effectively over the long run. Businesses that do not track inventory are much more likely to run into forecasting problems than those that do. This in turn leads to huge losses and resource shortages in critical moments.
Manual and Paper-Based Processes
Many supply chain processes employ manual and paper-based systems that carry the risks of errors and delays. These include documentation management, paperwork, supply chain assessment and even risk assessment.
Photo by YuriArcursPeopleimages on EnvatoElements
Here, human errors are especially important to consider, given that the paperwork is always done and submitted by human employees. While it’s an easy job to fill in the position, manual methods hinder the overall speed and agility of the supply chain, resulting in increased lead times and reduced responsiveness to market demands.
It was estimated that:
It’s possible that the simple paperwork is what actually really hinders global supply chains. Even during the pandemic, most companies that took the biggest damage were those that did not have digital systems in place to switch to work-from-home.
Inefficient global supply chains represent a complex and multifaceted challenge for businesses worldwide. As such its intricacies are vast and varied.
Make sure to check out our next article to know more about what else contributes to supply chain challenges and how exactly it impacts organizations!
Belyh, A. (2022b, December 7). Inventory Management Statistics from Reputed Sources | 2023. FounderJar. https://www.founderjar.com/inventory-management-statistics/
Netstock. (2022). The ultimate list of inventory management statistics. Netstock. https://www.netstock.com/blog/the-ultimate-list-of-inventory-management-statistics/
Spanning Cloud Apps. (2023, April 5). Cyberattacks 2022: Statistics and Trends To Know | Spanning. Spanning. https://spanning.com/blog/cyberattacks-2022-phishing-ransomware-data-breach-statistics/#:~:text=Did%20cyberattacks%20increase%20in%202022,services%20to%20manage%20business%20operations