The Main Challenges for Global Supply Chains

The past few years have set off huge alarm bells for global supply chains. Until now, the industry is still reeling from the consequences of COVID-19.

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Factors such as manufacturing delays, material shortages and lack of workforce are haunting supply chains all around the world.?

While disruptions are expected to ease in the upcoming years,?we’re?unlikely to come back?to how things were before the pandemic. Supply chains need to adapt to the current changes if they want to operate efficiently and survive ongoing crises.?

What does that mean for the industry, exactly? Let’s take a closer look at what is most likely to impact supply chains in the near future, and how companies can prepare for what’s to come.

1. Ensuring visibility across all operations?

Supply chains have become increasingly complex over the years, encompassing large supplier networks across multiple locations. During the pandemic, it became evident that the deeper into the supply chain, the fewer companies were aware of what is going on with their operations.

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Seeing how shortages often happen further down the line, visibility becomes a crucial aspect of supply chain management. Most importantly, having visibility enables companies to spot risks early, and act accordingly.

It’s why?supply chain mapping, regularly?gathering information from every supplier tier, and leveraging data analytics?to identify pain points early are vital for establishing a resilient supply chain.

2. Diversifying sourcing & suppliers

The disruptions caused by COVID-19 have made it painfully clear that?supply chains need flexibility in order to operate efficiently. As such, diversification has become an important part of risk mitigation for a number of businesses wanting to leave no room for unpleasant surprises.?

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Having different sourcing locations at your disposal, as well as maintaining relationships with multiple suppliers aside from your go-to ones works as a safety net against probable disruptions.

As the supply chain landscape fluctuates between different instabilities, companies are making increased efforts to near-shore production as a way to manage problems before they actually happen. Even though diversifying sourcing as a whole requires additional resources, it pays off in the long run when issues actually arise.

3. Following good sustainability practices

Sustainability is currently the word on everyone’s lips, and there’s a good reason for that. Even if it might have seemed like companies would halt their sustainability efforts because of the pandemic crises, the exact opposite happened–85% of businesses put more effort into reaching sustainability goals.?

Why is that? Simply because?companies cannot afford to put sustainability aside. Legislators are putting new sustainability laws in many different countries, stakeholders demand information on sustainability goals, and customers, as well as employees themselves, expect companies to meet sustainability standards.?

Develop a code of conduct for the suppliers you work with and carefully verify compliance with sustainability standards at every supply chain level and strengthen internal and external collaboration.

4. Monitoring customer demand

Changes in customer demand during the early phases of the pandemic were a huge challenge for supply chains worldwide. As?data?shows us, during lockdowns, people were rushing to buy basic home necessities (such as cleaning supplies or packaged foods), but significantly decreased their spending on things like cosmetics or electronics.?

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We all remember the empty shelves in stores in 2020. On the other hand, businesses that sell items with low demand find themselves with piles of unsold product.

This is exactly why keeping up with and preparing for sudden changes in customer behavior is critical to surviving in the marketplace. In particular, companies should strive to be able to respond to changes in demand in real time.

5. Making resilience a priority

Most of the trends we currently see in the industry have one goal in common: to make supply chains more resilient. This doesn’t come as a surprise since, as recent years have shown us,?focusing on day-to-day operations without proper planning for possible disruptions is a recipe for disaster.?

It isn’t that resilience is a completely new concept for most companies, far from it. But ever since supply chain disruptions have become more common and unpredictable over the years, resilience has become more than simply managing risks as they come, but rather a way to build a strong competitive advantage.?

Make sure you’re prepared for multiple scenarios by?testing how your organisation would be able to respond?to them, and verify where improvements need to be made in the process.

Increasing the inventory of crucial materials and products, carefully verifying and diversifying the supplier base, as well increasing the collaboration and information sharing with suppliers all contribute to a more resilient supply chain.