Challenges in Supply Chain

Deloitte recently conducted a survey of 600 executives at manufacturing and retail companies to understand their perception of the risks and challenges they are facing and the strategies they are deploying. The survey was collected from various large and small companies in a variety of industries, and from countries around the globe, with the majority located in North America, Europe and China.

“The survey’s key findings include:

• Supply chain risk is a strategic issue.
• Margin erosion and sudden demand changes often cause larger impacts.
• Concern about extended value chain.
• Supply chain risk management not normally considered effective.
• Companies face a wide variety of challenges.
• Many companies lack latest tools.”[1]

Diversity in the chains and markets

One of the major challenges for executives is to understand the nuances of the industries. What works for Amazon may not work for Amazon Fresh, there is huge difference between the inventory management for perishables versus managing other goods in the market. Even the markets where we are trading has a large impact on the profits and trends of supply chain. Executives have to keep a close watch on what the competitors in the same industry are doing and see how they can improve their processes and stay ahead of the competition. [2]

Government Regulations

It is said culture eats strategy for lunch, it would appropriate to say policies and regulations each innovations for lunch. No matter how far ahead of competition technological innovations can take us, government policies and regulations restrict a lot of these.

A classic example of this is the Amazon drones for delivery. [3] The Federal Aviation Administration grounded Amazon and did not allow them to test drones for delivery of products in a faster and efficient manner. Although Amazon has the infrastructure and capability to support the Prime Air services that would ensure higher customer satisfaction, it is going to be a few years before this can become reality due to the air safety regulations that are to be considered. There are several considerations that need to analysed before we can see this in reality.

Despite the advancements we can clearly see that, industry specific challenges and government regulations pose a great challenge to the executives to formulate strategies. Evidently, there is no one size fits all formula for success in supply chain. It takes the experience and keen eye for application of latest innovations to obtain these small edge over competitors and make them reflect as wins in profit.

If the world is shifting towards becoming better at supply chain and expanding horizons to serve global audience, it is only logical to assume we will see more innovations in supply chain logistics that reduce wait time, reduce delivery time and ensure bigger gains for consumer and manufacturer.

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[1] http://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-risk-ripple-effect.html  - "The ripple effect: How manufacturers and retail executives view the growing challenge of supply chain risk."

[2] http://www.wto.org/english/res_e/booksp_e/aid4tradeglobalvalue13_part3_e.pdf

[3] http://arstechnica.com/tech-policy/2014/06/faa-grounds-amazons-drone-delivery-plans/