Key Supply Chain Challenges for Organizations

Supply chain Organizations are required to be cost efficient with optimum asset utilization while fast responding to market forces and client requests.

It (Supply Chain) is in a constant state of war with new and unanticipated hindrances to productivity and profitability. Post COVID-19, the size of the SCM market is assessed to grow from $18.7 B in 2020 and is projected to reach $52.6 B by 2030, at a CAGR of 10.7%. The significant supply chain issues are accurate demand reading, transportation costs, inventory check, and timely fulfillment. Below are some of the major challenges in supply chain organisations to assist with building versatility and agility.

Customer demands drive the need for better Quality and Service and fast delivery

Organisations should adapt to the challenges of a dynamic market environment: adjust to variable client expectations on quality (27%) and improve their capability to reduce delivery time to clients (26%). Growing customer expectations like convenience, personalised experiences, social obligation, and price sensitivity have challenged all organisations

Inventory Optimisation

Redundant Inventory thickening, damaged inventory, Poor visibility of stock across chain, Quality rejections (COPQ), stock outs, delay in fulfillment due to discontinuous upstream are some of the most common Inventory challenges. 

The high expense on Transportation

The Russian-Ukraine war will continue to impact raw materials, like aluminium and steel, and further, constrain the semiconductor market. With several routes becoming non-functional following the war, the supply of items to and from certain regions has ceased. As transporters are compelled to depend on longer routes, more money is being spent on fuel. Finding alternative sources to these items has demonstrated to be expensive for the supply chain sector as the new routes are distant. Transporting costs have risen by 600%.

E-Commerce Boom

20-30% of Grocery businesses moved online during the pandemic. Online shopping is currently part of mainstream life; many companies went online during the pandemic due to lockdowns. E-commerce businesses should guarantee they have a versatile and proficient supply chain to ensure stock availability and fulfil customers' needs in terms of speed of delivery. It is projected that E-Commerce will account for more than $6.5 trillion in deals by 2023, which is 22% of retail sales worldwide.

Digitization and Automation

SCM platform must integrate with technology which demands high integration costs. Progressions in digital technology, cloud-based Supply Chain software, and rise in higher need for visibility significantly contributes to SCM software market growth. However, the lack of IT infrastructure in underdeveloped countries and expansion in security and privacy concerns hamper the development of the SCM software market. AI system implementation needs significant investment in terms of money and time. The supply chain automation market grew 10.3% every year, and it is expected to double by 2026. The autonomous vehicle market is expected to rise from $1.6 billion in 2021 to $11 billion by 2028. The main challenge in automation is failing to incorporate existing systems with new technologies without steep expenses.

Sustainability & Reusability

Environment and Sustainability factors are keeping some of the organizations on a constant check with respect to Supply Chain design-rethink (new materials, energy efficiency, Carbon footprint etc) thereby pushing organizations for working towards the triple bottom line.

There's not a one-size-fits-all way to deal with settling supply chain challenges. Utilizing a couple of methods together can give total and far-reaching results.