In recent years, supply chains have faced increased scrutiny due to global shutdowns, international conflicts, and severe weather events. In today’s competitive e-commerce landscape, customers demand reliable delivery of high-quality goods. To meet these expectations, businesses must adopt efficient and cost-effective supply chain management processes. However, to tackle these challenges, companies must first identify their biggest challenges in terms of not meeting expectations on either the customer-facing or vendor-management side of the spectrum. Business leaders can explore key supply chain enterprise resource planning (ERP) systems and strategies to help overcome the major obstacles facing organizations today.

The effect of supply chain disruptions

Supply chain disruptions are a significant concern for many C-suite members and boards of directors as they can severely limit manufacturing capacity. According to a survey by the Federal Reserve, 23% of companies reported that their supply chains were a significant constraint on manufacturing in the fourth quarter of 2022.

Supply chain disruptions have far-reaching effects, including increased costs, canceled orders, reduced profitability, and diminished company valuation. Whether caused by global pandemics, natural disasters, or overall poor planning on an organizational level, supply chain disruptions can cause an enormous ripple effect that impacts everyone from the manufacturer to the end customer and everyone in between.

How to overcome top supply chain challenges

Company leaders, particularly those assigned with the management of supply chain logistics, need to be constantly aware of possible challenges they might face so they can proactively mitigate issues and minimize damage should disruptions and bottlenecks occur. A few key supply chain issues to be aware of and best practices for confronting them head-on include:

1. Enhance visibility to identify issues early

   To effectively tackle supply chain challenges, it is crucial to detect them early on—a task made difficult without a clear view of operations. Businesses that possess comprehensive end-to-end (E2E) visibility can monitor the movement of supplies, components, finished goods, and information across the supply chain. This capability empowers decision makers to swiftly pinpoint bottlenecks and rectify problematic areas, which is particularly vital for companies with a fragmented supply chain reliant on external partners.
   
   Any slowdowns within the supply chain, whether from internal or external processes, can reverberate throughout an organization, leading to frustrating and costly delays. By adopting new technologies like automated data collection and reporting, businesses can enhance their visibility and gain real-time insights into their supply chain workflows.
   
   Implementing technology like Internet of Things (IoT) sensors, RFID tags, and blockchain can provide real-time data on inventory levels, production status, and delivery timelines. This visibility helps in identifying bottlenecks and addressing them promptly.

2. Diversify suppliers to avoid shortages

   A scarcity of raw materials, including glass, plastics, lumber, and metals, can result in production delays as manufacturers are unable to sustain operations without a consistent supply of these essential resources.
   
   According to the 2023 Hubs Supply Chain Resilience report, raw materials shortages were the most commonly cited supply chain challenge, with 61% of the 334 respondents identifying it as a primary disruption.
   
   These shortages can inflate supply costs, eating into profits and often resulting in higher prices for consumers. To confront this issue, many businesses opt to diversify their supplier bases and enhance communication and collaboration with vendors, thus reducing the risk of unforeseen shortages caused by regional factors like weather events. Additionally, companies can leverage business technology solutions, such as supply chain ERP systems, to monitor supply levels and maintain minimum stock, gaining an advantage over competitors who procure supplies on an as-needed basis.
   
   Dependence on a sole supplier can pose risks. Expanding your supplier network, even if it means slightly higher costs, can protect your supply chain from disruptions like natural disasters, geopolitical conflicts, or economic downturns.

3. Strengthen customer and supplier relationships to communicate and collaborate effectively

   Suppliers should not only be seen as potential sources of risk but also as valuable allies in preventing disruptions. It is imperative to consistently nurture these relationships in order to maintain ongoing growth.
   
   These days, a lot of chief supply chain officers are actively working to enhance collaborative relationships with key customers and suppliers. For instance, some firms are devising shared inventory-hedging strategies to secure supplies, reduce lead times, and mitigate risks. Others have found strength in diversifying their supplier pool, including minority- and women-owned businesses, which often bring innovative approaches to agility and resilience against disruptions. Despite progress in managing supply chain disruptions, there’s still much to be accomplished.
   
   Building strong relationships with suppliers, customers, and logistics partners can improve communication and collaboration. This can lead to better forecasting, reduced lead times, and more flexibility in responding to changes.

4. Train and educate staff to encourage adoption of new supply chain ERP systems and procedures

   Every year, companies adopt new technologies to enhance their supply chains, such as automated data collection and IoT devices, which provide real-time updates on goods’ status as they move through the supply chain.
   According to the 2022 Interos Annual Global Supply Chain Report, 99% of respondents agreed that investing in software solutions for supply chain risk management offers clear benefits. However, this transformation can be challenging, particularly for larger companies replacing intricate operations with new systems.
   
   It is crucial for businesses to establish effective training programs to prepare staff for new technology and procedures. Failing to do so could result in the loss of institutional knowledge and experience as seasoned employees struggle to adapt. By striking a balance between cutting-edge technology and proven best practices, businesses can replicate past successes and prepare for future challenges.
   
   Equip teams with the necessary skills and knowledge to manage supply chain challenges effectively, including training in risk management, technology usage, and communication skills.

5. Implement risk management strategies

   Implementing risk management strategies involves several key steps. First, identify potential risks such as the natural disasters, geopolitical conflicts, and supplier failures we talked about earlier. Next, assess the impact of these risks on the organization’s supply chain, considering factors like likelihood and severity. Then, develop specific plans to mitigate each risk, such as diversifying the supplier base and maintaining safety stock. Continuously monitor the supply chain for potential risks and regularly review and update risk management plans.
   
   Remember, part of this process will also include ensuring teams are well-trained in risk management practices and that clear communication channels are available between an organization, its suppliers, and its stakeholders. Regular, ongoing testing of risk management plans is essential to ensure future success, so be sure teams stay informed about external factors that could impact the supply chain.
   
   When organizations build a resilient supply chain that can quickly adapt to changes and recover from disruptions, they can effectively manage risks and ensure the stability and success of the supply chain.
   
   Identify potential risks and develop contingency plans to mitigate them. This could include maintaining safety stock, having alternative transportation routes, or securing backup suppliers.

Supply chain ERP systems implemented by Citrin Cooperman

Modern supply chains have created unique challenges as they become more complex and far-reaching, and managers need supply chain ERP systems to give them more visibility than ever to navigate these obstacles.

For example, with NetSuite Supply Chain Management, businesses can identify risks to effectively plan contingencies and address weaknesses before they become major issues for customers. With sophisticated demand forecasting, material requirements planning (MRP), and scenario planning, NetSuite gives businesses the tools they need to prepare for tomorrow’s supply chain obstacles.

Citrin Cooperman’s Digital Services Practice is experienced in implementing these tools to help businesses overcome their supply chain challenges. To learn more about how our knowledge and tailored NetSuite solutions can help you navigate disruptions and optimize your supply chain for success, reach out to your Citrin Cooperman advisor or sales@citrincooperman.com.