Top 5 Supply Chain Management Challenges and How to Overcome Them (With Real-life Examples)

A streamlined and efficient supply chain is necessary for the long-term success of any brand.

An efficient supply chain management helps businesses reduce their costs, have a faster production cycle, and reduce the time involved in customer fulfillment.

Supply chain management is a complex process, and a delay or mismanagement in any part of the process can hinder the entire chain, and as a result, hamper customer satisfaction.

In this article, we have covered the 5 biggest supply chain management challenges, and how you can overcome them.

1: Supply Chain Complexity due to Multiple Channels

Consumer buying behavior has evolved over the years. Consumers now buy and search for products across all possible sales channels. Hence, it is imperative for brands to have an omnichannel presence. Different companies use different channels either solely or several at the same time, depending on their requirements and business size. For instance,

• D2C eCommerce websites that require last-mile delivery and local logistics
• eCommerce giants like Amazon and Walmart have their own fulfillment options and terms and conditions which retailers need to adhere to.
• Traditional brick-n-mortar stores and wholesalers require huge storage locations to cater to their demand.
• Dropshipping service provides require fast service logistics service to ensure that customers receive goods in the minimal time possible

Using multiple channels to sell your product makes it difficult to manage the supply chain. If you use any of these modes of selling, you will have to monitor their inventory to ensure the product is available on time. Your supply chain managers need to work across multiple supply chains and engage with third parties to ensure that the order is fulfilled timely, regardless of how the goods were ordered by the customer.

How to Overcome

To monitor inventory across different sales channels, you should deploy an inventory management system, or out-source inventory and warehouse management systems to streamline Supply Chain Management (SCM). This is the most efficient and in fact, necessary way to seamlessly manage your products on different channels.

Example

In this case, the size of the business is not a constraint. A lot of small, medium and larger enterprises use Inventory Management Software (IMS) to streamline their eCommerce operations and tackle any issues that arise due to complex supply chains.

At EasyEcom, we offer a cloud-based inventory management solution to effectively manage supply chains for all kinds of D2C and B2B businesses. Borosil, a glassware category champion is one of the largest D2C brands associated with us and we have been streamlining their supply chain operations for more than 2 years now. Ever since onboarding, Borosil has been grown 100% YoY.

Epigamia, on the other hand, made its digital debut with us last year. With EasyEcom’s sterling inventory and warehouse management solution, the premium yogurt was able to manage its supply chain more efficiently and grow multiple folds on the digital platforms.

2: Sustainable Supply Chain Process

While Green Consumerism and the idea of environmental sustainability is not a completely new concept, it has gained a lot of traction in recent years. The pandemic has further increased the urgency of implementing a supply chain process. Many global corporations are now actively working on reducing their carbon footprint, and fulfilling their environmental, social, and governance (ECG) commitments.

As much as the thought process is noble, sustainability in the supply chain is no easy task but there are several methods that can be adopted to make the process easier.

How to make your Supply Chain more sustainable

To implement a sustainable supply chain, you can:

1. Increase Automation
   

Automation in eCommerce has been around for a while now and it is still a growing trend owing to the sudden upsurge in the digital transformation of storefronts. With the tools and techniques available today, you can automate multiple supply chain functions at the same time, starting from sourcing of the products to the final shipping. Many of these automation techniques have a huge potential of reducing the supply chain’s Environmental, Social, and Governance (ESG) impact. One good example of this would be simply eliminating paper and using the digital methods for invoicing, order management, and Quality Check (QC) that can significantly reduce a business’s environmental impact.

2. Sourcing Materials and Components Locally or from nearby Countries

Sourcing locally primarily has two major benefits:

a) it can help businesses diversify their supplier base and reduce supply-chain risk, and b) lower transportation-related carbon emissions

Many global companies are now diversifying away from overseas aggregators and vendors like China to ensure a greater supply chain resilience and become more sustainable in the process.

3. Partner with Industry Peers

Partnering with industry peers is a great way to ensure that:

• There are uniform sustainable practices along the supply chain
• Your audience knows the part you play in it.

Example

LivingPacket offers packaging that can be reused 1000 times and has a digital address display that facilitates smooth return management.

To optimize deliveries and reduce carbon footprint, UPS ORION , uses on-road Integrated Optimization and Navigation using advanced machine learning and AI algorithms. This helps them save 100 million miles and 10 million gallons of fuel a year.

3: End-to-End Visibility

End-to-End Visibility simply refers to getting full transparency at all stages of Supply Chain Management (SCM) right from procurement through end delivery of finished goods to the customers. To be more precise, end-to-end visibility can be incorporated into 6 primary areas:

1. Procurement and Inventory Management
2. Finance
3. Logistics
4. Operations
5. Quality Control
6. Sales and Customer Service

Achieving end-to-end visibility on a real-time basis is one of the most daunting challenges for eCommerce supply chains. The majority of businesses outsource their supply chain to 3PL or 4PL service providers, which has its own set of benefits but it also makes getting accurate real-time data even more difficult.

How to Overcome it

Using the Internet of Things (IoT) gives you complete control over the entire process.

Having IoT devices on the factory floor provides warehouse managers with real-time production feedback, and using RFID chips on all vehicles can give live logistics information.

For complete end-to-end visibility, it is also important to have a strong relationship with your suppliers. A strong collaborative relationship with suppliers is a win-win for both the business and suppliers and helps improve both upstream and downstream performance.

Using a centralized cloud-based solution will allow retailers to collect data (of all fields marketing, finance, operations) from a single platform. It will also help brands optimize real-time data flow both upstream and downstream.  

Businesses can also set Key Performance Indicators (KPIs) and monitor them to access full visibility throughout the supply chain.

Example

Swedish company Volvo is one of the biggest names in car manufacturing to push IoT technologies in cars. What’s more interesting here is how the “Internet of Things” is also impacting what goes on behind the scenes to get these cars on the road.

Volvo uses cloud-based services and IoT technologies to support the logistics side of its supply chain while ordering components from different countries to shipping vehicles to suppliers across the world. These services give them greater flexibility over on-premise setups.

Source: Atology

4: Handling Uncertain Challenges

Ever since the pandemic hit the world and nationwide lockdowns were announced, it has become quite evident and widely acknowledged that global emergencies can affect the entire supply chain ecosystem.

Your business needs to be better equipped and well prepared to manage uncertainties.

The operational problems faced during the pandemic, have given birth to new cost-effective solutions and automation across platforms.

How to Handle Uncertainties in the Supply Chain?

The global supply chain has adapted well to the aftermath of the situations from 2020.

Modern technology is now playing a key role in handling uncertainties and improving disruption and change management.

You can deploy a digital twin system to test different hypothetical scenarios, and get analytics-driven insights into what different planning scenarios’ likely outcome will be. This will help you model optimal responses to large-scale disruptions in case they occur.

What is a digital twin system?

Digital twins is a digital representation of physical systems production networks, logistics networks, etc. It stimulates the entire supply chain performance including all the complexities and supply chain hindrances that lead to loss and/or increase risks.

To overcome and tackle future uncertainties and challenges, you can adopt the following two-step process:

Step 1: Create a System for Data Collection

Businesses that are least affected by the pandemic and have adapted quickly are the ones that have a strong data collection system.

Regardless of the industry, you work in, having authentic data regarding the industry, latest trends, customer needs, market changes, etc. helps you get strong and meaningful insights.

Put simply, a good database provides you with actionable insights, which can help you make better business decisions and minimize uncertainties.

You should collect data on all possible business fronts like manufacturing, production, employee, and consumer side.

Step 2: Leverage Predictive and Prescriptive Analytics

Implementing artificial intelligence can go a long way in analyzing and evaluating data, and in turn, help you leverage predictive and prescriptive analytics.

What is Predictive Analytics?

Using historical data, current trends, and advanced analytics to predict uncertain future events.

By predicting future uncertainties or global emergencies well in advance, you can work on predictive contingencies plans to ensure a smoother adaption to the business environment in case the uncertainties come true in the future.

What is Prescriptive Analytics?

Using machine learning to assist the decision-making process by leveraging predictive analytics.

Example

DHL Supply Chain, a prominent global logistics company, has created a digital twin of their warehouse in the Asia-Pacific region for Tetra Pak. The digital twin is supplied with real-time data from the Singapore warehouse and it simulates the physical condition of stock movement and individual stock level in real-time. This enables effective and smooth coordination of operations, and makes faults visible, and thereby helps in improving safety and productivity in the warehouse.

Source: DHL

One other great example of a global brand using data analytics to handle uncertain challenges and optimizing the supply chain is PepsiCo.

The company ensures that they replenish the retailers’ shelves with appropriate volumes and types of products they sell. PepsiCo gets reports that include warehouse inventory and POS inventory, which are later used to reconcile and forecast production and shipment needs.

If you are interested to know more about their supply chain you can listen to this webinar.

5. Customer Service

It is essential for businesses to have a customer-centric supply chain network since for any business long-term success it is imperative to fulfill their order at the right place and at the right place.

The challenge in this is that every customer has different needs, and customers expect to have tailor-made goods that are made based on their specifications. This shift from mass-production to customization affects manufacturing and logistics.

How to Overcome?

You can improve the customer experience by making the following changes in their supply chain:

1. Enhancing Visibility: By sharing information between ERP, WHM, eCommerce, procurement, and accounting, businesses can gain more visibility into their operations.

2. Introducing Flexibility and Agility: Using an integrated supply chain network will help you easily identify operational bottlenecks, increase floor visibility, and manage warehouse operations with more agility. This in the long run, will help you shift from mass production setup to a mass customization setup.

3. Personalizing customer needs: SCM can enable organizations to provide a personalized service to customers based on their purchase history. Providing personalized services can further help you enhance customer experience. Purchase history records, can help you implement lean inventory and reduce costs.
   

Example

Improved inventory invisibility helped footwear brand Foot Locker improve customer experience. In case, customers are unable to find the exact product they want to buy, the store associate can get it from their nearby store or have it directly shipped to the customer's residence.

Besides this, they also provide the option of reserving a product on their eCommerce website and try-on the footwear in a local store before buying.

For now, that’s a wrap on the major supply chain management challenges and their best available solutions. We will be back for a second installment on this subject matter with the latest and most efficient set of solutions. Stay tuned!

Are you looking for an omnichannel inventory management solution with integrated B2B order management for your eCommerce business? Drop us a line at care@easyecom.io or directly sign up for a demo here.