Supply chain optimization is often on many manufacturers' lists of objectives, but it's one goal that frequently doesn't get crossed off. There are numerous risks involved with supply chain management that are detrimental to the flow of goods and production. It's an issue that manufacturers have tried to overcome with increasing zeal.
According to Forbes, manufacturing companies spent an average of 1.7 percent of their revenue on technology during the past 10 years, with a priority on supply chain optimization. In most cases, there's a focus on developing a better functioning supply chain that operates at higher speeds, capacities and with a great deal of accuracy.
However, there are significant obstacles in achieving a high-performing supply chain.
1. Letting the Supply Chain Dictate Performance
One of the big takeaways from a Supply Chain Insights Report is that just 22 percent of manufacturing organizations have taken the time to design their supply chain. From a practical perspective, most companies would never dream of manufacturing a product without investing significant amounts of time and effort into research and development. In other words, there's a planning phase of any creative process that needs to provide a foundation.
To accomplish this task, manufacturers need access to substantial data. Automated data collection plays a central role in giving companies insight into their existing supply chains, from warehouse management analytics to inter-facility distribution. Organizations should begin with a firm understanding of how their processes work as they currently stand. For instance, many manufacturers are forced by the constraints of their ERP software to go through several time-consuming steps to complete an operation. Mobile applications can help organizations streamline receiving and transferring into a single process instead of multiple ones.
2. A Problem with Leadership Vision
According to Forbes, there are those involved in finances who take a purely transactional perspective of the supply chain. The reality is it's a vastly complicated system of moving parts that demand close data collection. Organizations can't readily prepare for the future if they're only using historical data instead of real-time information to visualize workflows. Manufacturers must consider how well they're managing inventory to ensure there are sufficient stockpiles to meet demand depending on the various customer markets, geographies and time periods.
Barcoding and RFID tags can help organizations in this process. Manufacturers can create labels based on industry standards, and ensure customers are immediately able to keep track of all relevant information. RFIDs enable automatic data transmission, which not only eliminates many tedious manual processes but also creates a database of accurate information that's continuously updated.
3. Internal Supplier Issues
According to Spend Matters, a tell-tale sign of trouble ahead when dealing with suppliers is a noticeably high employee churn rate. Some of the issues this can point to may include:
- Unsatisfactory working environment
- Labor disputes
- Regulatory infractions
- Wage problems
The net result of these issues can be an unstable supply chain. Suppliers play key roles in ensuring materials are accessible. If there are concerns, they could negatively impact a manufacturer.