3 Common Supply Chain Management Challenges

Handling the complexity of supply chain operations, achieving greater efficiency, reducing costs while supporting expansion in new markets, managing potential risks and improving customer satisfaction are several factors that can stretch your supply chain to its breaking point. To avoid supply chain disruptions that may lead to significant financial losses, it’s imperative that you assess and solve the three most common supply chain management challenges:
1. Cost Control: Today’s customer expects lower costs and greater efficiency. However, supply chain costs are dependent on a series of things, including rising fuel, energy and freight costs, increasing labour rates, technology upgrades, rising commodity prices and new government regulations. Further, serving an increasing number of global customers with a wide range of products and services typically results in a complex network of suppliers, manufacturers, transporters and warehouses, which may prevent you from keeping costs down.

What can you do to reduce operating costs? The key to lower supply chain costs is handling inventory more efficiently. According to supply chain management specialists, inventory drives supply chain costs. While transportation is about 5 percent of total costs, raw materials and components often constitute more than 50 percent. How can you reduce your inventory levels? Simply put, investing more in transportation allows you to transport large volumes of merchandise and handle inventory efficiently. To find out more about how to do this, contact Freightcom today. Our specialists are ready to lend a helping hand to anyone who needs expert supply chain advice.

2. Risk Management: Periodic supply chain assessment along with careful re-planning based on potential risks is needed in order to be competitive, regardless of the industry sector in which you operate. By fine-tuning your supply chain operations according to market changes you will be able not only to respond effectively to demands, but also to mitigate the risks that can jeopardize your business.

But analyzing, assessing and quantifying risks can be very difficult, especially if we consider certain factors, such as global sourcing, new product launches, credit availability and security. Additionally, since most supply chain disruptions occur infrequently, preparing for specific worst-case scenarios is almost impossible.

What can you do? Supply chain management professionals recommend organizations to use the latest freight-management tools that deliver the most optimal concept models known to reduce supply chain risks to a minimum. When two suppliers provide the same products or services in terms of quality, pricing and lead times, a buyer will always choose the supplier presenting the lowest risk.

3. Customer Satisfaction: These days, supply chain management goes far beyond delivering goods at the right time, in the right place and in good condition. Although “delight customers with products and services that exceed expectations” is a great slogan that fits any business strategy, exceeding customers’ expectation in logistics in not that easy. Why? Basically, because managers do not know what exactly customers expect. And even when they do, most of them are unable to establish standards so that expectations are met; understand the differences between the desired and actual performance, which often leads to promising a higher level of service than can be provided; build long-lasting relationships; and keep up with evolving needs and demands.

If the recent economic recession has forced you to take a look at your supply chain operations and find new ways to root out major inefficiencies, contact us by calling (877) 759-7176 or filling out our online form. At Freightcom, our job is to help supply chain companies identify and tackle challenges head on in order to resolve problems efficiently so that the best possible business results are achieved.