April 27, 2018      2 min read

For any business, managing the flow of the supply chain is key to productivity and customer satisfaction. This is especially true as a company begins to experience growth. In this article we examine three key factors which contribute to supply chain failure. Further, we offer tips on how to navigate these factors and to mitigate the losses they often entail.

Offshoring

One of the biggest factors that can contribute to supply chain failure is when the business conducts some or all of the businesses processes to overseas locations. Businesses typically decide to offshore processes when conducting the tasks at a domestic location is expensive. A business may, for example, opt to produce the entirety of their products in overseas factories where the cost of labour is drastically less than domestic costs. They may also decide to offshore accounting processes, or they may simply opt to ship raw materials from overseas rather than sourcing them locally.

While these practices can be very economical for the business owner, they make it much more difficult for the owner to oversee and control the supply chain. Checking up on the supply chain at each point where processes are conducted at domestic locations is much faster and cheaper than flying overseas to carry out inspections.

If you opt to offshore some processes, commit to inspecting the supply chain regularly and thoroughly. One way to do this is to hire a representative in the country you have chosen to relocate your processes to. Have your representative conduct thorough and regular inspections to ensure everything is running smoothly.

Dependence on Multiple Suppliers

Relatedly, being dependent on multiple suppliers for things like raw materials, products or packaging can also increase the likelihood of supply chain failure. Businesses may opt for multiple suppliers to get the cheapest prices at all times, but this can come with other risks.

Being dependent on multiple suppliers will make it difficult to keep track of who is supplying what, where and when. Complicating the supply chain in this way can make it difficult to have clear oversight, leading to mistakes.

Modern Communications

Before the invention of the internet and the proliferation of social media platforms like Facebook, Instagram, Twitter and more, errors in the supply chain could be quickly corrected without much redress from the outside world.

However, in our increasingly interconnected and digitised world, mistakes in the supply chain that effect the customer are likely to be communicated on a digital platform at an often uncontrollable pace. For this reason, regularly check up on your supply chain and ensuring all processes are running effectively, ethically and
productively.

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