Labor shortages, fluctuating demand and other structural factors have plagued the supply chain these past several years. Though the pandemic is in the rearview mirror, supply chain difficulties persist, and many industries are still feeling the squeeze of material and workforce shortages. It’s imperative organizations find solutions to address these challenges — otherwise, they will face supply bottlenecks and prolonged project delays that will negatively impact the bottom line. The smartest organizations will focus on supply chain agility and solving the following four challenges soon.
1. Inventory management and optimization
To prevent inventory imbalances, efficient and accurate demand forecasting is a necessity. Organizations must ensure they’re working with the most accurate and up-to-date data to get a clearer picture of real-time demand. Many procurement teams are held back by manual data entry processes, inconsistent data sources and overall data quality issues. This inaccurate or plain outdated data can obscure supply chain visibility and cause bottlenecks or under/oversupplies of inventory.
The best data incorporates real-time tracking and monitoring of inventory levels so teams can make more informed decisions. Investing in a tool that segments suppliers by stock levels allows teams to appropriately prioritize suppliers, ensuring sufficient resources are being allocated and processes are managed accordingly.
2. Supply chain visibility and transparency
Limited end-to-end supply chain visibility leads to a lack of updated, comprehensive information about the movement and status of supply chain assets, leaving teams with incomplete or inaccurate data. Leaders operating on this misleading information will likely create project delays, exacerbate inefficiencies and increase costs. A holistic view of the supply chain, on the other hand, empowers teams to make better, faster decisions and ensures supply continuity, even in uncertain economic environments. This visibility is made possible by having access to a trusted source of reliable data.
To ensure all data is unified and autonomously updated across all relevant systems, organizations should invest in a supplier data platform that integrates with their existing tech stack and harvests and aggregates data from partners and external databases. There are many complexities inherent to working with global supply chains, so facilitating visibility is critical to understanding context and making informed decisions. Teams with unified visibility across the supply chain lifecycle can more efficiently identify when a disruption or business failure is likely, enabling them to implement contingency plans and ensure continuity.
3. Risk management and resilience
From the pandemic to economic turmoil and the geopolitical climate — supply chain risk management has emerged as a critical function for all organizations. Procurement professionals must anticipate and mitigate supply chain risks while still delivering business value. One way to mitigate risk is to ensure supply chain resiliency by diversifying suppliers, finding backup sourcing options and developing robust relationships with stakeholders. This proactive approach to risk mitigation helps reduce the supply chain’s vulnerabilities and quell risks like supply shortages, quality issues, delivery delays and unexpected price fluctuations.
While supply chain resiliency is vital for mitigating risk, cost efficiency is also a concern for procurement professionals, who must optimize spending, negotiate favorable contracts and identify cost-saving opportunities without compromising their supply chain.
Procurement professionals can minimize expenses, maintain operations and handle disruptions more effectively by streamlining their processes and implementing cost-effective strategies backed by data insights.
4. Sustainable and ethical supply chain practices
Environment, social and governance (ESG) initiatives are no longer a “nice to have,” but rather, an imperative. Consumers want to work with organizations committed to ethical, sustainable practices and environmentally friendly initiatives. Diversifying suppliers to include businesses owned by women, veterans, members of the LGBTQIA+ community, people with disabilities and small businesses shows an organization is committed to doing social good.
Additionally, sourcing goods and services from diverse suppliers has business benefits, including increased agility, improved product quality, lower costs and enhanced resiliency against supply chain disruptions. Procurement professionals should vet their suppliers to ensure they are also committed to ethical and sustainable practices. Remaining aware of tier-two and tier-three spending is imperative to remaining in compliance and ensuring proper spend allocation to diverse and sustainable suppliers.
Despite the persistence of supply chain challenges, these actionable tips can help any procurement professional overcome common stumbling blocks. The result? An agile, disruption-free supply chain with diverse suppliers and end-to-end visibility powered by up-to-date data.