When a large amount of a product is involved, a company’s operations can’t work without careful planning and monitoring of the supply chain. If management doesn’t try to predict demand, the company could run out of stock at a crucial time, which would cause huge losses. But if a business makes sure to always have enough supplies, it won’t have to worry about problems like this. Read on to discover everything there is to know about disadvantages of supply chain management and to become a subject matter expert on it.
Companies that do well depend on well-run supply chains. Because of this, people all over the world want to get certifications in supply chain management. In response to these needs, AIMS’s Supply Chain Academy offers not only Ph.D. degrees in supply chain management, but also certification, certificate, and online MBA degrees.
Top 12 – Disadvantages of Supply Chain Management
Suppliers, manufacturers, distributors, wholesalers, retailers, and customers or end users all play a part in this chain of events, which is made up of different links or processes (purchasing, supply, stock management, transit, and maintenance). Check out these disadvantages of supply chain management to broaden your horizons.
Rates of Exchange for Money
Changes in foreign exchange rates can also cause problems in the supply chain. It can have a big effect on earnings because it varies from country to country. Global supply chain markets are more likely to be affected by what happens in regional trading markets.
Not Enough Training
By far, the most common mistake that businesses make when adding a new system to an existing supply chain is not getting enough training. Businesses shouldn’t make this mistake. Instead, they should put money into a well-planned employee training programme to make sure that workers learn the right skills. This will keep your production staff from leaving and stop them from making mistakes that waste time and money.
Loss of Check on Quality
Because of how global supply chains work, buyers and sellers will probably have to talk across long distances. Communication issues are common due to time zone differences. Because some supply chains go through more than one country, unrest, natural disasters, and other crises, like COVID-19, could quickly affect the steps along the chain in other countries.
When suppliers are in different countries, it is harder to keep track of technical production processes, make sure quality is consistent, and make sure everyone is talking to each other well. This has an effect on how good the product is.
Improper Implementation
It takes time, work, and money to update a supply chain management system. When an installation is done wrong, it can waste time and money by wasting labour, providing services that aren’t needed, and missing deadlines.
Before making any changes, a good logistics company would figure out how much those changes would cost as a whole. Research client’s freight schedule, consolidation options, and logistics needs for last mile before creating new system.
Departments Lack Collaboration
For the idea of supply chain management to work, there needs to be more communication between departments. Because getting different parts of a big company to work together is hard, there is a chance that this idea will fail.
“One & Done” Mentality
Because logistics service providers don’t think ahead, the supply chains of their customers are less efficient. The company will fall behind the competition because it depends on this provider. To avoid this, you need to keep analyzing.
Reaching out is Slow
As time passes and more features are added, managing projects becomes more challenging, leading to either unfinished projects or inadequate ROI for those completed.
More Exposure to Risks in the Supply Chain
The political and economic situations in each country pose a unique risk to businesses that buy from other countries. Even if a company chooses to buy locally, it can still affect local supply chains because the local supplier may buy from somewhere else.
Reputational Risks of Linked Supply Chains
When supply chains are linked, it may cause people to worry about a company’s reputation and look at its partners more closely. Logistics managers should be on the lookout for any signs that their company is acting in an unethical way when dealing with the government.
The basic idea is that procurement teams in both the public and private sectors should look closely at all businesses for signs of unethical practices like fraud, corruption, modern slavery, human trafficking, and broader issues like child labor. Before choosing which suppliers to work with, buyers should always be honest and try to learn the basics of how to act in an ethical way.
Needs Trained and Individualized Staff
For supply chain management to work well in an organization, the people who work there need to be qualified and trained. To get such a qualified and skilled team, the company needs to spend money.
Complicated
Several groups in an organization are involved in the process of managing the supply chain, which can cause problems. Because of this, there may be disagreements, which could make it hard for the company to run day-to-day. New ideas may cause worker reluctance leading to unexpected problems.
Longer Delivery Times
Global supply chain creates a problem with delivery times due to logistics between countries. It means that you need to do some planning ahead of time. During the COVID-19 pandemic, supply chains had a lot of trouble getting things to people on time.
The coronavirus moved quickly from China to places like Italy and Spain in Europe, wreaking havoc on infrastructure and supply chain networks around the world. Empty shipping containers piling up in Chinese ports caused a global shortage of goods. Because supplies were late or didn’t come at all, everyone in the supply chain lost money.
Frequently Asked Questions
What Problems do People have with the Supply Chain?
Social problems in the supply chain are operational factors that affect people’s safety, welfare, and the growth of the community. They are related to the product or the process of making it. Five companies’ case studies illustrate how risk and capability research led to core principles.
What is the most Dangerous Thing about the Supply Chain?
Output from the supply end is not enough. This is the most important threat that any organization needs to deal with first. Even though a supplier’s financial stability is important, it shouldn’t be the only thing you think about.
What Makes a Supply Chain Less Efficient?
Prioritizing improvements to package management could help businesses find and fix inefficiencies in the supply chain. No problems with bar codes, wrong delivery, product choice, or labeling in packaging supply chain.
Conclusion
The cost of global logistics management is one of the things that could be bad about it. If your company wants to cut costs while making more money, a global supply chain might be the way to go. But keep in mind that if you do that, competition will almost certainly increase, and you may need to lower your prices to stay in the game. Read on to learn more about disadvantages of supply chain management and become the subject matter expert on it. To gain a comprehensive understanding of objectives of supply chain management, read beyond the surface level.
