Supply Chain Challenges to look out for in 2023

By PartnerLinq

The COVID chaos highlighted supply chain problems that have been visible in the transportation space for some time. Transportation is, as we all know by now, a fragmented industry with hundreds, perhaps thousands of individual service suppliers. Efficiency issues have been surfacing across diverse industries for decades. We've seen warehouses in close proximity to large cities stumbling to keep up with demand—inventories beyond physical capacity strain from impeding deliveries, thus impacting shipments. We've seen next-generation e-commerce struggling with the ability to make timely deliveries and ships waiting for days and weeks to access ports and unload containers at terminals around the globe.

These issues have all been with us for some time. However, instead of seeing what's happening in the real world, we have been subject to focus on political fodder combined with the news. And what we have been missing is the focus on the supply chains, stressed to the breaking point, for decades.

Although we’re living in a world of transformative technologies, where products are ordered online and deliveries are made the same day, many businesses still struggle with supply chain challenges. Challenges such as long lead times and siloed supply chains are two subjects that fit nicely into today’s discussion paper. 

Long Lead Times

According to research by the Institute for Supply Management, manufacturing lead times in the US averaged 100 days, and the average commitment time rose to 173 days, which are the highest numbers recorded.

Why does lead time matter?

Lead times matter, particularly when lead time is broadly defined. When lead time is defined as the period between starting and finishing the production process for a given product, the supply chain process also broadens to include locating materials, placing orders, producing products, and delivering finished goods. 

Additionally, lead times play a critical role across supply chain processes. For instance, when acquiring raw materials from a far-off location, during order entry*, while having a product manufactured or prepared for shipment, and when transportation is involved.

Simply put, the duration, or the time it takes to move the product between points, becomes essential, as delays such as slow order processing or shipping holds can lengthen lead times.

Longer lead times invoke many implications for both buyers and sellers. Therefore, managers must take proactive measures to minimize lead times and the underlying factors impacting the supply chain.

*Order cycle times – the time it takes to process an order, including the time it takes to send or respond to a PO or PO Change.

 Why is shortening lead time important?

Numerous advantages come with shorter lead times; customer experience is the most significant. If you are able to deliver a superior customer experience, your customers are more likely to return, and a returning customer means two things, a reduction in the cost of customer acquisition (cost savings) and recurring revenue. The delivery of a superior customer experience also contributes directly to gaining a competitive advantage while saving you more for high-value business initiatives, such as advertising, warehouse expansion, and digital enhancements.

Siloed Supply Chains

Silos happen when individuals or whole departments cannot or are unable to share information with others. As a result, communication among individuals and departments gets confined, entangled, and impaired, resulting in information gaps between your suppliers and your business teams.

How do supply chain silos develop?

Supply chain silos develop when systems, departments, and vendors are unable to share vital data across supply chains operationally. In simple terms, they lack or lose the ability to share information in near real-time.  Supply chain silos develop organically as an organization grows. The company’s growth hinders supply chain innovation and interferes with additional development due to the constraints on information within the supply chain.  In other words, without a proper flow of information between trading partners and stakeholders, sustaining growth becomes a challenge.

According to an analysis by Bain & Company, cost-savings from a silo-free supply chain are twice that of a siloed one, i.e., 10% - 20% compared to 5% - 10%. This suggests that recognizing the power of a truly connected silo-free supply chain will help one achieve the desired business outcomes efficiently.

Why is removing supply chain silos important?

Close cooperation with suppliers and partners is crucial, considering the ever-growing complexities of today's fragmented supply chains. There are many data, system, and organizational hurdles to overcome to ensure a "single source of truth." True collaboration requires end-to-end visibility, which cannot take place when individuals or whole departments are unable to share information. The result is today's fragmented supply chain is nothing short of late, unsuccessful, or missed deliveries and an inability to deliver customer value. Supply chain managers, therefore, must have access to timely information in order to execute seamless deliveries based on informed decisions and deliver superior customer experiences to achieve sustainable competitive advantage.

PartnerLinQ: Delivering Unified Digital Connectivity and Visibility Across Your Supply Chain

PartnerLinQ delivers complete visibility, control, and unrestricted flexibility and can help you gain total control over your supply chain connectivity. This end-to-end supply chain solution boosts operational effectiveness and provides insights throughout your value chain for better decision-making and business expansion.

Seamless Connectivity

Efficiently onboard partners and suppliers while maintaining data accuracy amongst your systems, including ERP, PoS, CRM, and more – enabling outstanding consumer experiences via seamless connectivity across channels, including e-commerce, social media, and third-party apps.

End-to-End Visibility

Get a comprehensive view of your B2B and B2C transactions with an intelligent supply chain solution. It proactively alerts you to potential supply chain leaks helping you maintain complete control over your company procedures – enabling access to real-time data on the order process, inventory, delivery, and potential supply chain disruptions. 

Transparency

Utilize real-time data from all supply chain points to ensure continuous operations. Through a tightly knit supply chain network, this end-to-end supply chain visibility solution leverages integrated AI, machine learning, and pattern recognition to help you discover anomalies, assure traceability, and improve cooperation inside and outside your firm. As a result, it empowers you to confidently set actionable goals, visualize processes via real-time insights, access valuable information on demand, and proactively engage and rectify issues.

Control

Identify and address current and potential major supply chain issues through comprehensive supply chain visibility. With data-driven network intelligence, you can pinpoint crucial procedures that require automation for increased operational efficiencies.

With complete control of your supply chain, you get:

• Improved collaboration with the stakeholders
• Business agility
• Proactive decision-making
• Increased cash flow
• Enhanced quality assurance

Just like every other aspect of the business, intelligent tech-driven supply chains are vital to sustaining growth and generating high ROI. As long as organizations continuously innovate and invest in trending supply chain solutions, overcoming disruptions will become more seamless than ever before.

References:

https://www.bain.com/insights/supply-chain-cost-inflation-infographic/

Supply Chain Latest: Labor, Long Lead Times a One-Two Punch for U.S. Factories - Bloomberg