McDonald’s discontinued serving large fries in several countries–according to their social media posts, the reason behind this decision was a problem with their supply chain. This disruption highlights the importance of supply chain management and how poorly managed chains can directly impact customer satisfaction.
Let’s take a closer look at common supply chain problems that various businesses face; we’ll also share some ideas about how you can ensure your supply chain continues to run smoothly.
What Are Some Common Supply Chain Problems?
1. Long Lead Times
Long lead times are one of the most common supply chain problems and are affected by several factors, including:
- Suppliers taking too long to deliver raw materials
- Factories located far away from each other
- Inefficient transportation
Excessive lead times cause delays and can disrupt your production schedule.
2. Lack of Visibility
A lack of visibility can occur when there’s poor communication between different members of the supply chain. For example, you might not know where your products are or when they’ll be delivered. This can cause delays and make it difficult to track down items if there are any issues.
3. Stockouts
A stockout is when you run out of a product and can’t get more from your supplier. This can be caused by several factors, such as:
- Unpredictable demand
- Long lead times
- Inefficient inventory management
4. Overproduction
Overproduction occurs when you produce more of a product than you need, which can tie up resources and lead to higher costs. Overproduction can be caused by several factors, such as:
- Inaccurate forecasting
- Inefficient production planning
- Too much inventory
5. Returns and Damaged Goods
Returns and damaged goods are another common–and frustrating–issue. This problem occurs when products are damaged during shipping or if they’re not what the customer expected. Returns and damaged goods can be costly and cause delays.
How to Solve These Problems
There are tools that address supply chain management problems by managing a supply chain as a service–this is a new concept in which every supply chain process outside of a single transaction system is managed as a service. These tools serve as a single source of truth for all supply-chain related issues, improve visibility across the board, and reduce the time it takes to identify and tackle problems. If you’re a new business, it’s a good idea to take a close at these tools.
Solving Long Lead Times
Lead times can be reduced by streamlining the supply chain. This can be done by shortening the distance between factories, using faster transportation, or having suppliers deliver materials more quickly. Supplier diversification is one option that can help you find the right supplier and avoid long lead times.
Mitigating a Lack of Visibility
A lack of visibility can be addressed by improving communication and collaboration between different members of the supply chain. This can be done by using supply chain software and setting up regular meetings.
Supply chain service management tools are especially helpful because they allow you to create incidents and follow them to their resolution. Each incident contains all relevant information about an issue, including who is responsible for managing it.
Avoiding Stockouts
Stockouts can be reduced by improving forecasting, inventory management, and production planning. This can be done by using software to track demand, setting up alerts for when inventory levels are low, and creating a production schedule that takes into account lead times. It’s also important to be honest with your customers–you should explain to them that they might experience delays due to possible stockouts or other supply chain-related issues that are beyond your control.
Solving Overproduction
Just like stockouts, overproduction can be addressed by improving forecasting, inventory management, and production planning. Software can be used to track customer demand and send alerts when it’s time to produce more of a product, and production schedules should be created in advance so that you know how much of each product needs to be manufactured.
Avoiding Returns and Damaged Goods
Last but not the least, returns and damaged goods need to be minimized. To reduce the number of returns, it’s important to have a good quality control process in place–this includes inspecting products before they’re shipped and ensuring that they meet customer expectations. It’s also important to have a clear return policy that is fair to both the customer and the business. This policy should be prominently displayed on your website and in your store.
Finally, for damaged goods, it’s important to have an efficient insurance plan in place so that you can recoup the cost of any damaged products.
