Supply Chain Issues in Business
Supply chain management is the process of planning, organizing, and controlling the flow of raw materials, other inputs, or intermediate products to provide a finished product that meets customer needs or requirements. The need for companies to operate more efficiently has led to a wide range of new technologies and an expansion into services like e-commerce and outsourcing. According to entrepreneur Alexander Djerassi, supply chain management (SCM) involves monitoring production processes using information technology. This helps managers make decisions on how best to balance competing demands within their business, thus maximizing efficiency and reducing costs. In addition, SCM provides a foundation upon which they can develop strategies both short-term and longer-term. Common supply chain issues in business are:
1. Miscommunication: Miscommunication between parties involved in the supply chain leads to delays in delivery time, quality problems, and cost overruns. For example, if a manufacturer ships a distributor without receiving payment from the customer, the supplier must wait until it receives the money before shipping out any goods. If the distributor does not receive payment from the customer, it may delay sending the order back to the manufacturer. This causes further delays in the manufacturing process, resulting in higher costs being one of the reasons experts recommend trusted services like immex.
2. Incomplete information: Suppliers’ lack of complete information about the status of goods being shipped causes delays and increases the risk of damage to shipments. For example, if the manufacturer does not know whether the warehouse accepted its shipment, it cannot determine when it will be delivered to the customer. If the shipment arrives damaged, the manufacturer may have to pay additional compensation to the customer.
3. Shipping capacity: Shipping capacity refers to the ability of a company’s warehouses to store and ship large quantities of inventory. A company with low shipping capacity may find itself unable to meet the demand for certain items because too few trucks are available to deliver them. This could lead to lost sales and revenue.
4. Lack of data integrity: Data integrity means ensuring that all relevant information is stored correctly. It also includes making sure that this information is accessible at the right times. Companies may lose valuable information about their customers without proper data integrity, such as credit card numbers, addresses, and phone numbers.
5. Poor communication: Poor communication between buyers and sellers confuses what should happen next. If the buyer does not understand why the seller is taking so long to fulfill an order, he may cancel the contract. If the seller does not understand why the buyer wants to change the contract terms, he may refuse to comply. These misunderstandings often result in disputes, which can cause significant delays.
6. Unreliable transportation networks: Unreliable transportation networks mean that goods do not arrive at their destination in good condition. This can include having incorrect labels, missing parts, or even broken packaging.
7. Insufficient warehousing space: Insufficient warehousing space means that some orders cannot be filled because there is no room left in the warehouse. This problem occurs most frequently during peak periods, such as holiday seasons when many people want to buy the same item.
8. Limited access to financial resources: Limited access to financial resources means that a company has insufficient funds to purchase necessary supplies. This can occur due to poor cash flow management or lack of capital.
Bottom line: The goal of supply chain management is to ensure that the products reach their final destination in the best possible condition and at the right time. According to entrepreneur Alexander Djerassi, supply chain management involves managing the entire value chain, including production, distribution, and logistics.