It’s no surprise to those in supply chain management that supply chain issues are just part of the job. What’s extraordinary in these turbulent times, though, are the number of disruptions and their depth. Add to that the inability to predict how long and how damaging these issues are, and it seems like there are more issues than solutions.
So, what are the issues creating chaos in supply chains? How can these issues be lessened or eliminated? And what can be done by savvy SCM professionals to deal with them?
Current Supply Chain Issues
While many issues are interconnected, a few are still rippling from the last year and a half. These events were so significant they have contributed to other disruptions as we continue to deal with uncertainty. Let’s take a look at the most significant disruptions supply chain professionals are experiencing today.
Higher Shipping Costs
It goes without saying that consumers realize the impact of higher costs in the form of inflation. It is estimated that shipping from China is up an astounding 7-10 times over a year ago. Unfortunately, this rise is expected to continue. Port congestion and a container shortage are adding to the problem as well. And on land, costs are up for LTL and full-load routes in every state in the U.S.
Increased Complexity
With COVID-19 fueling an already growing e-commerce trend, consumers buy differently than they did even five years ago. They also have access to more channels and more selection. And drop shipping pushes the need for speed in international shipping. The result is a supply chain complexity that has increased and will continue to do so alongside rapidly changing customer expectations about what customer service means.
Increased Demand
COVID-19 did a lot of front-end damage to the world economy. But it seems as though the backend chaos is also starting to take hold. With a forced shutdown in many countries, demand curves rose.
Now, the frantic pace to fill orders on almost every category of goods means congested ports and not enough people to unload the goods that arrive. Warehouse capacity is stretched since incoming goods need to be stored at least temporarily for processing and inventory building until they’re sent to retailers to feed item-hungry consumers. This effect may be directly impacted by government-provided stimulus plus pent-up desire for spending that has sent demand curves into overdrive.
Labor Costs
Like the impact of stimulus on demand, the effect of lingering fears over COVID-19 and subsequent ripple effects have impacted labor. Fewer workers returning to their jobs and added demand mean that labor shortages are even higher than in boom times. Specific to the supply chain issues are workers for the fulfillment, trucking, and other logistics-related jobs.
Answering Supply Chain Issues with Technology and Software
While nobody could have predicted the convergence of events that brought us to today, it is easier to predict what will happen if supply chain professionals try and manage the system under the old planning paradigm.
Plex DemandCaster offers a complete suite of integrated solutions to automate, analyze, and predict with greater accuracy than manual planning efforts. This software includes demand and supply planning, inventory forecasting and optimization, rough cut capacity planning, and distribution requirements planning.
With end-to-end visibility offered by modern technology, DemandCaster gives users the ability to identify demand trends and optimize inventory, capacity, and distribution strategies to navigate today’s issues. Demand can be forecasted at multiple levels of aggregation, and the software offers robust functionality for “what-if” scenarios that help develop contingency plans. Planning professionals can do their jobs strategically while prioritizing by margin through ABC analysis even during the roughest disruptions. Accurate forecasts based on near real-time demand data drive optimized inventory planning and tactical scheduling when margins, space, delivery, and capacity are tight. This is how the best manufacturers persevere through today’s supply chain issues and uncertainty.
Contact us to discover how DemandCaster can help your company do the same and come out ahead of your competitors.
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