4 Common Supply Chain Issues and How to Avoid Them

Pivot International  |   November 18, 2016

A supply chain that functions smoothly and predictably is essential to any product-based business’s success. Supply chains are essentially your product’s lifeline – if any single part stops working, you could easily find yourself with some major, and expensive, problems to address.

Supply chain problems can be especially dangerous for small and mid-size companies, which often don’t have the risk mitigation plans in place that many large enterprises do. Here are 4 of the most common supply chain issues, and ways you can prevent them from costing your business time, money, and efficiency.

1. Relying too much on supply chain technology to manage the entire supply chain.

Computer software has undoubtedly done great things for the supply chain industry. Enterprise resource planning (ERP) and manufacturing resource planning (MRP) systems, like we use at Pivot, make managing an increasingly globalized supply chain possible, cutting down drastically on the potential for human error and allowing companies to keep communication open with all their partners.

However, technology must be managed by a competent human no matter how advanced it is. This means you need someone with the specialized knowledge required to use those systems to their fullest potential as tools to keep your supply chain running efficiently. Without that knowledge, all those systems will do is complicate things and cost you money.

2. Forgoing supply chain transparency.

Although supply chain transparency is becoming more important to the public at large for many products, some companies are still fairly content to leave parts of their supply chain in the dark.

Depending on the product, this may not bother consumers – however, it can pose a large risk to businesses.

The toy company Mattel, for example, had to issue a massive recall of nearly 1 million toys back in 2007 due to a lack of transparency. As countless news outlets reported, including the Harvard Business Review, the toys were covered in lead paint that wasn’t detected until many of them had entered the market. Part of the reason for this crisis was that one supplier had to overcome a temporary material shortage, and used an unauthorized vendor to do so.

Keeping your supply chain transparent from end to end makes it easier to identify problems as soon as they arise, and prevent the kind of large-scale fiasco that bedeviled Mattel.

3. Allowing unnecessary complexity to creep into operations.

A global supply chain is complex enough in its very simplest form. If you’ve got many different partners, or distribute your product in multiple countries, the complexity can quickly become onerous.

It’s not always noticeable when unnecessary or redundant steps begin creeping into your operations because it usually happens gradually, as your business expands its geographic coverage or adds new products. After some time, however, the result can be a supply chain operation that’s become bloated and unwieldy.

To avoid the costs and inefficiencies associated with this problem, it’s important to regularly review your operational policies and systems and cut out any unnecessary processes.

4. Weak risk mitigation planning.

For most large companies, risk mitigation plans are a fact of life. But many small and mid-sized companies don’t make risk mitigation a priority. That means that if a supplier shuts down or a certain material’s cost goes up, your supply chain can quickly become disrupted, negatively impacting your profits.

To avoid supply chain disruptions that could become catastrophic, you should work with your supply chain staff to identify potential risks and develop contingency plans. Small and mid-size companies have less to lose than huge enterprises, making the ability to quickly manage supply chain disruption even more important.

An efficient, effective supply chain can mean the difference between a profitable product and one that just costs your business money. Time spent ensuring yours is operating at its maximum potential will be time well spent.