Supply Chain Management, why is it so hard?

The major challenges for Supply Chain Management and Logistics. In other words, why is it so hard. And there are many, many reasons. Just to mention six.

The first one is the idea of metrics. How do We measure a system? No matter what system of metrics you have, it's very difficult to get something that looks at the end to end performance. This is one big challenge. How do we measure this? Therefore, the idea of having a perfect order, or a perfect shelf. How everything contributes to that. We want to make sure that it's filled/satisfied always. But anyway, it's a part of a larger problem, how do we measure this system that covers multiple functions, multiple companies.  

Another challenge is observing at the politics in the power. Who wins? So, if we look in supply chains, the power between a very large store, and a very large manufacturer of Consumer Package Goods, or CPG. The question is who wins, and who controls the supply chain. There's a lot of politics and power between players, based on how much power they display in that supply chain.

One more challenge to mention is about visibility. Why is it hard? Because all the data is stored separately. Things are in very different parts. It's not like there's one supply chain database. Typically, every company will have its own. What can be seen, who can see it, and how quickly can be seen it. All parties don't have equal access. It doesn't mean that it's all shared, and so easily accessible. Thus, visibility into what's happening in the supply chain, since it's going end to end, is always a big challenge.

Further, is the whole idea of uncertainty. There's uncertainty in everything that we deal with the supply chains. The demand itself. The idea that the product demand is getting harder and harder to predict, because we're having shorter life cycles. So, there's always a shorter life cycle, and there's more chance and more challenge to predicting and forecasting. There's also variability in manufacturing yield. We could also look at unreliable sourcing of raw materials from the input side of things, also look at lead times. There's variability and uncertainty in almost every aspect of a supply chain.

Then we see increased complexity where it's getting harder and harder to manage. The number of SKUs or Stock Keeping Units, a SKU, is increasing. There's more and more products being offered; it gets harder and harder as we have more items to manage. We have customers becoming more demanding, and they're starting to diverge in what they want. Consequently, different ways of replenishing and taking care of customer demands and different channels that are new and emerging.

And then finally, another reason why it's so hard is that supply chains are global. And because they're always open at some time zone in the world. This means they're crossing multiple regions, time zones, languages and cultures.

So, all these complications, and there's many, many more. These are just six big ones. These are the reasons why supply chain management is so hard, and why we're trying to get better at it, why do we care. The focus is to have a constant drive for a continued improvement.