1. Cost Hike
Throughout the supply chain management channel, costs have been increased, and profit margins are under sheer pressure. There is a lack of visibility and accountability, which apparently increases operational costs. Also, many factors are responsible for this price hike, including an increase in fuel price and commodity prices and high labor costs from manufacturers and suppliers.
Some complicated international logistics are shifting towards high charges for quick transfer and storage of product management. Also, commodity prices are on a hike due to the increasing cost of raw materials.
2. Complexities due to Multi-Channels
Customers prefer buying products through multiple channels. As the market expands, the supply chain should adapt. Hence, supply chain managers are required to generate variations on functions to address every channel. Also, it has become mandatory for managers to manage multiple supply chains, varied organizations, and third parties. This would ensure a better customer experience irrespective of how customers receive and order products. The rising complexities in the supply chain owing to multiple channels are a significant challenge for the sectors.
Today, eCommerce websites are selling products to customers directly, requiring local logistics and quick delivery. Also, traditional wholesalers need large storage spaces near metro areas and precise inventory control. This will ensure that the products are available in ample amounts during the supply chain process.
3. Risk Factors in Supply Chain
Environmental fluctuations, economic pressures, international complexities, and trade-related conflicts directly or indirectly pressure the supply chain sector. However, these pressures can turn into risks and issues through networks. And this causes significant problems.
Today, customers and clients are spread across the globe, which needs keen coordination and management. However, creating additional steps to the supply chain produces high complexities for downstream and upstream members. In terms of compliance, regulations, and quality management requires rigid agreements, controls, and contracts, which is a difficult challenge to overcome. Supply chain management managers are advised to produce contingencies along with mitigation action strategies to eliminate risks and manage them efficiently.
4. Volatile Nature
Complexities and volatile nature create problems in supply chain management while also affecting the entire infrastructure. Dealing with these issues promptly is one of the tough challenges for managers before developing bottlenecks and more. The increase in the number of internationally sourced goods is causing port congestion. It pressurizes trains, ships, and trucks that require loading, unloading, and more functionalities.
Some political situations are responsible for making tariffs throughout trade routes. It has resulted in additional fees and increased processing time of customs. Moreover, there has been a shortage of skilled drivers in trucking capacity. Due to the increasing pressure on the drivers, they are finding less lucrative jobs. And hence, logistics are facing difficulty attracting or retaining the right persons.
5. Accountability & Compliance
Organizations are bound to consider social compliance while doing business across the globe. But, the supply chain sector is currently facing several unethical practices, including child labor practices, low wages, and more. Over time, verifying supply chain management partners to follow the standards has become essential.
Managing risk-related issues is one of the top concerns for managers. The problems include legal issues and brand damage that causes irreparable damage to businesses affecting profit.
6. Quality Defects & Language Restrictions
Quality defects are pretty hard to manage since there are a lot of differences in accepting the defect stages in different countries. It is necessary to check the quality level and the ratio of acceptable defects in the coming time.
Also, various countries conduct daily operations in different languages, which is again a challenge in the industry. To resolve these issues, supply chain management businesses should hire professional interpreters having skilled knowledge. This way, the language barriers can be eliminated.