Supply chain problems often result in failure for a company, making it imperative to learn from the mistakes of others so you don’t run into the same problems yourself. When a company chooses to outsource components of their supply chain, they are often putting their reputation at risk. Since the supply chain is a very complex beast, it’s important to assess as many factors are possible when deciding on your supply chain avenues.
By taking a closer looking at supply chain failures, we can identify overarching problems that can lead to factors affecting inventory management. It will paint a better picture of what goes wrong and how to avoid it in your company.
When you have your primary and back-up suppliers located close to each other, this could prove problematic. For example, if there is a natural disaster such as a tsunami or earthquake, or political turmoil in your supplier’s location, this could make you very vulnerable. Both of their factories could be damaged or access roads for delivery could be blocked or inaccessible for a substantial period of time. In this case, it is better to diversify. Pick two suppliers in two different locations so you spread out your risk in the event of a local problem.
Although there are many advantages for outsourcing to overseas suppliers, there are many hindrances in this process that can lead to failure. For instance, language barriers, the high cost of travel to visit the supplier, shipping delays, poor working conditions, and unfair wages are a few of the issues that prove challenging when outsourcing overseas. Taking time to build trust and strong relationships with your supplier is one of the best ways to avoid some of these problems. Alternatively, hiring a representative in the overseas country can help you keep an eye on the quality of suppliers.
Delays in the supply chain can mean dissatisfied customers and in this digital age, there are a multitude of platforms that people use to get information across quickly. Bad news has the potential to ruin your reputation and information can go viral quickly. With a dedicated social media person in your company, they can develop strong policies and methods to be both proactive and reactive with social media comments. They can also use the platforms to leverage positive messaging and manage your brand.
Complex Supply Chains
Supply chains can be very convoluted as your supplier may order supplies from someone else, who also orders supplies from someone else. There are many factors affecting inventory management and a complex supply chain can be one of them. When the supply chain has increasing numbers of suppliers, it can halt production or delivery if there is a problem with any one of the suppliers. These problems can impact inventory levels and lead to delays. It is hard to keep tabs on quality control when the processes are spread between numerous suppliers. When too many suppliers are involved in the supply chain, one problem can have a domino effect. It’s imperative to have good communication with suppliers in order to minimise factors affecting inventory management.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.