Most Common Supply Chain Problems

The supply chain has always been a crucial part of global commerce. However, the challenges it faced came to the forefront during the disruptions of the global pandemic, international conflicts, and major weather events in some regions. In addition to these factors, there is a constant and rapid change in customer expectations and behaviors, keeping merchants on their toes.
 
So, it is unsurprising that you need efficient and cost-effective supply chain management processes to thrive in this highly competitive, dynamic business world for flawless fulfillment, stellar customer experience, and impeccable business reputation. Efficiency and fast reaction to customer expectations are key.
 
After all, there is a reason behind the steadfast growth of the global supply chain management market. Worth $25.74 billion in 2022, it is expected to reach approximately $72.1 billion by 2032, with a growth rate of 10.9% between 2023 and 2032.
 
So, let’s delve a little into why businesses face supply chain challenges.
 

Reason Behind Organizations Facing Supply Chain Challenges

 
Many business leaders expected supply chain challenges caused by the geopolitical disruptions would gradually ease as the world settled into the “new normal.” However, as you might know, many challenges still exist. According to a survey conducted by CNBC in December 2022, out of 341 logistics managers, 61% stated that their current supply chain is not functioning normally. Additionally, 29% of the managers were apprehensive about returning to normalcy and predicted that it may not happen until 2025, if it happens at all.
 
Hence, the recent experience of the supply chain upheaval compelled businesses to formulate strategies and proactively address supply chain challenges to satisfy customer demand, especially volatile businesses with uncertainty of customer spend. Also, the drastic rise in consumer preference in eCommerce drives you to focus on an efficient and streamlined order fulfillment process to ensure your customers receive high-quality products. Your order processing should be accurate and timely to help you thrive in the cut-throat competition where customers have numerous choices.
 

Key Supply Chain Challenges

 
So, to deal with the daily supply chain operations, you should be aware of the following most common issues to efficiently mitigate risks and minimize damage if there’s any disruption:
 

• Difficulty in Forecasting Demand

 
The global pandemic brought about a significant paradigm shift in consumer demand and expectations, which is still evolving. A constant change in customer preferences, expectations, and behaviors also leads to regular shifts in market trends. These factors often make it challenging to predict consumer demand, which is crucial for optimized inventory management and efficient order fulfillment. A near-perfect forecast of demand leads to correct raw material purchases, resource allocation, and manufacturing.
 

• Shortage of Materials

 
The scarcity of certain raw materials such as metals, glass, and plastic causes manufacturing delays as it’s difficult to continue production without basic resources. In the 2023 Hubs Supply Chain Resilience report, 61% of 334 respondents selected material scarcity as the top reason for supply chain disruption. Such shortages often lead to increased supply costs, reducing profit margins and higher consumer prices.
 

• Rise in Shipping Costs

 
Increasing shipping and logistics prices can compel you to choose between increasing product prices, thus shifting the burden on the consumers, or realizing the cost that impacts their profit margin. This issue is worsened due to the mismatch between high shipping demand and limited capacity, leading to increased costs until capacity increases or there’s a demand reduction. Also, the increased customer expectations for fast and affordable or free shipping adds to the complexity, making it difficult to balance meeting the demands and controlling costs.
 

• Lack of Supply Chain Visibility

 
You need real-time visibility in your supply chain operations to identify and handle the challenges efficiently before they become major issues. Only a high level of end-to-end visibility will enable you to track supplies, materials, finished products, and updated information moving through your supply chain. It enables you to identify the bottlenecks quickly and address any issues essential for a fragmented supply chain that relies on external partners.
 

• Coping with Technology

 
Most of the supply chain issues with technology occur due to outdated, legacy systems, absence of integration between different platforms, data silos, lack of scalability, and cyberthreat. Such issues often lead to inefficiencies, inaccurate data management, disturbances in operations, and compromised data security. Implementing advanced, innovative technologies such as the Internet of Things [IOT], Artificial Intelligence [AI], sensors, blockchain, and machine learning helped revolutionize supply chain operations by providing real-time tracking, predictive analytics, and automated decision-making capabilities. It transformed the supply chain landscape with increased efficiency, agility, and responsiveness to customer needs.
 

• Port Congestion

 
Your supply chain operations can face shipping issues created by ports in two main ways: congestion and climate-related issues. Though the conditions have improved after reaching their peak in 2022, sometimes spikes still cause delays. Multiple factors, such as seasonal changes in demand, shifts in international trade, or changes in shipping regulations, cause such scenarios. If you depend on sea freight, you can mitigate these risks by sourcing from suppliers in different regions and maintaining domestic facilities to alleviate the strain on overseas operations.
 

• Environmental and Social Impact

 
Focusing on environmental and social impacts and creating a sustainable supply chain goes a long way in expanding your customer base and enlisting the support of eco-conscious customers. You can do it by minimizing waste, lowering utility costs by reducing energy consumption, and staying ahead of upcoming regulatory and legislative standards as governments focus on green initiatives. Apart from that, you can also conduct a supply chain audit with sustainability experts to identify areas for improvement or identify more fuel-efficient shipping methods.
 

• Inflation and Labor Constraints

 
Macroeconomic issues such as inflation and labor shortages can be challenging for your supply chain operations. As per the American Trucking Association, truck driver shortages reached a record high in 2021 and 2022. It impacted delivery time and shipping prices, causing a ripple effect across supply chain operations. While labor shortages call for a better employee retention program, higher prices due to inflation disturb your business’s bottom line.
 

• Consumer Demand and Behavior

 
With online shopping increasing manifold since the pandemic, consumer demand, expectations, and behavior have dramatically changed. After all, free shipping is one of the most crucial factors for 82% of consumers when selecting an online retailer. So, you need efficient and flexible inventory management to meet these latest customer expectations irrespective of the delivery model: retail locations, shipped products, or “buy online and pick up from the store.” You have to get an advanced WMS for updated stock and quick fulfillment.
 

 

Conclusion:

As we have seen, the supply chain challenges and the solutions vary across different industries and products. However, in this article, we presented some of the universal challenges most businesses face, and the solution to most of them is to invest in the latest, innovative technology. Technology is crucial in increasing business value by enhancing efficiency, strengthening supplier relationships, and improving customer service.

 

Hiring an efficient 3PL can help you with seamless supply chain and logistics operations. Connect with XPDEL to eliminate your supply chain worries and focus on your core competencies.

 

About XPDEL:

XPDEL is a leading hi-tech provider of Fulfillment and Logistics Services on a mission to enable growth for eCommerce companies. We are futuristic in our vision and constantly work on creating technology that helps us meet customer expectations for today and tomorrow. We have a wide network of Fulfillment centers that enables us to efficiently handle nationwide delivery in the US – same day, next day, and 2-day delivery. Being closer to the end consumer, we deliver much faster than others.