Several factors are creating a complex and uncertain logistics industry.  As a result, businesses are re-evaluating their supply chain management and are taking steps to increase the flexibility of their supply chain. Companies must be able to navigate the financial and operational challenges that come with disruptions while still addressing the needs of their customers. Some supply chain issues are unavoidable but having the right infrastructure and systems can help to resolve bottlenecks.

The Problem with Supply Chain Bottlenecks

A bottleneck in the supply chain prevents goods from moving freely through the supply chain. Some are small enough that the supply chain still continues to run, while others can halt it completely. No matter the size, bottlenecks cause delays, increase costs and decrease efficiency.

Supply chain issues can be caused by unplanned events such as:

• – Carrier disruptions
• – Labor shortages
• – Natural disasters
• – War or diseases
• – Factory closings

Bottlenecks can cause issues in forecasting, miscommunication with suppliers and vendors as well as inventory management issues, which create challenges for all types of businesses. 

Improving the Supply Chain

Companies must improve both their short- and long-term supply chain flexibility so they are able to withstand changes in the environment in which they operate in the following ways:

Diversification: Diversification is a step that leads to long-term benefits. Supply chains are designed to move the most amount of goods as quickly as possible, however in an uncertain environment, this only further increases the chances for disruptions. Companies that rely on a single supplier or region are now seeing the benefit to diversifying their supplier base as bottlenecks in procurement especially can stall production down the line.

Flexibility:  It can be challenging to change suppliers or warehouses, or to adopt new technologies. A lack of flexibility can make it hard to react to and bounce back from bottlenecks, particularly when they are the results of unexpected events.

Customer Expectations:  The average customer does not care how a supply chain works—they just want their order to arrive on time. Part of what has become so important to customers is a high-quality customer experience, which includes fast delivery. Supply chain issues can negatively impact the customer experience. Delays and extra costs lead to frustrated customers that may not be happy with your company and not buy from you again.

How to Mitigate Supply Chain Issues

Businesses can use times of uncertainty to reset their operations and renew their current logistics operating models to increase operational efficiency by:

Engaging in Constant Communication:  Businesses need to proactively communicate with onsite and remote workers, suppliers, carriers, and customers when supply chain disruptions occur. Real-time visibility is a must in order to retain customers. Customers appreciate proactive communication about any delays or increased costs. It may not be the exact experience you were hoping to give, but being honest and transparent can help customers to trust your brand.

Managing Inventory: The close management of inventory can help identify opportunities and potential risks. It may be necessary to repurpose assets, inventory, and capabilities to balance supply and demand. Having enough safety stock on hand, regularly auditing inventory, and tracking SKUs can help keep inventory levels in check and prevent shortages. Demand should be analyzed and prioritized in relation to inventory.

Forecasting Accurately: Some supply chain issues happen because there is not enough inventory on hand. Creating a forecast will ensure that enough inventory is on hand to meet demand. There are several ways to be able to predict demand, including order history and recent buying behavior.

Monitoring Procurement:  Procurement needs to fill urgent demands, maintain business operations, and handle supplier issues. When there is a disruption to the supply chain, this becomes even more difficult. Managing upstream supply disruptions from the biggest suppliers while reworking short-term sourcing decisions will manage the immediate problem and build a stronger business. Being able to manage supply uncertainty with suppliers of all sizes and in different locations can mitigate disruptions.

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