2. Globalization of Manufacturing Operation
With the globalization of manufacturing operations, having a global procurement
network that can support and react to your supply chain needs is important.
According to many chief procurement officers, selecting a strategic supplier that
provides manufacturing locations with consistent global quality and a reliable
local service, is a challenge.
One of the biggest challenges that companies are facing is how to reduce their
supply chain cost. In order to satisfy customers’ price expectations, companies
have opted to relocate manufacturing to low cost countries around the world in
an effort to reduce direct and indirect costs and to minimize taxes. But, having
global suppliers contributes significantly to complexity that comes from extended
delivery lead times. Customers not only want lower prices, but they also want
their products on time.
3. Safety and Quality Products
The pressure on manufacturers to produce high-quality products that are safe
is an increasing challenge. The number of product recall cases is growing
each day. It can damage a company’s reputation and is expensive to its
bottom line.
4. Shorter Lead Time, Less Inventory and Better
Throughput
With shorter product life cycles and changing market demands, companies
are forced to embark on a lean journey. It is important to note that the supply
strategies in a lean environment support the operations strategy. The
challenge is always to find not just a lean concept, but a working lean
solution.
5. Supplier Base Consolidation
Consolidation of the supplier base can bring many advantages. It eliminates
supply base variances and overheads, especially in the supply of C-parts. The
challenge is to find a supplier with solutions and experience in supplier-based
consolidation processes.
6. Access to Latest Technology
Access to the latest technology in various fields by having the right experts
has proven to be a great support in new product development.
7. Operating Cost Reduction
The need to continue to reduce costs while improving customer service and
supporting expansion in new markets and product lines. Most of the
respondents say operating cost reduction is “very important”.
Indeed, reducing operating costs remains the most frequently chosen goal
over the next five years—as it was over the past three—followed by customer
service. Improving service is one of top goals for supply chain management.
8. Omni-Channel Selling
The need to manage the “complexity of ‘omni-channel’ selling and customer
fulfillment”. More than half (55 per cent) said the demands of e-commerce
and mobile-enabled consumers are increasing the number of stock keeping
units they have to support. Building new distribution centers, and having
direct-to-customer fulfillment capabilities could help.
9. Volatility of Customer Preferences
As stated above, global supply chains are complex. Add to that product
features that are constantly changing, and the challenge is even greater. A
product is released and customers rapidly pressure companies to come up
with the next big thing. Innovation is important since it allows companies to
stay competitive in the market, but it’s also a challenge. To enhance a
product, companies have to redesign their supply network and meet complex
patterns of market demand in a way that’s transparent for customers.
10. Market Growth
Another factor that presents a challenge is the pursuit of new customers. The
cost of a developing a product, from R&D to product introduction, is
significant. Therefore, companies are trying to expand their distribution to
emerging markets in order to grow revenues and increase market share.
Companies all around the world are expected to expand in their home and
foreign markets. The introduction to new markets is difficult due to trading
policies, fees, and government policies.
11. Managing Trade-Offs
Balancing cost to serve and customer service is important to their companies’
supply chain strategy and balancing centralized production against proximity
to customers is important. Management who make decisions about supply
chain trade-offs got to be well informed.
12. Continued Complexity
As more technologies, processes and “red tape” continue to be layered onto
their operations, companies increase their costs of doing business and create
confusion about what must be done to realize the corporate objectives and
vision. This is especially true of companies with multiple business or
operating units. Companies must be vigilant about finding and stamping out
unnecessary complexity wherever it exists—for instance, identifying ways
business or operating units can share common processes and technology
platforms, or having suppliers provide a “reverse report card” that grades the
companies they work with on how easy it is to do business with them and
illuminates areas that could be streamlined.
13. Lack of Understanding
In most companies today, suppliers are key extensions of the business model and
play an important role in enabling companies to meet customer demands. That’s
why it’s critical for companies to know the full range of capabilities and offerings
suppliers can bring to the table, as well as any shortcomings among suppliers that
could disrupt the business. The last thing a company wants to do is promise
customers an increase in response time or the launch of desired new products
without being sure key suppliers can support those initiatives. When selecting
new suppliers, companies should be rigorous in evaluating all aspects of
suppliers’ business (including financial stability and how well suppliers’ cultures
mesh with their own). But the work shouldn’t stop there. Companies should
conduct regular audits and assessments on an ongoing basis to make sure
suppliers are keeping pace with their business.
14. Lack of Understanding
In most companies today, suppliers are key extensions of the business model and
play an important role in enabling companies to meet customer demands. That’s
why it’s critical for companies to know the full range of capabilities and offerings
suppliers can bring to the table, as well as any shortcomings among suppliers that
could disrupt the business. The last thing a company wants to do is promise
customers an increase in response time or the launch of desired new products
without being sure key suppliers can support those initiatives. When selecting
new suppliers, companies should be rigorous in evaluating all aspects of
suppliers’ business (including financial stability and how well suppliers’ cultures
mesh with their own). But the work shouldn’t stop there. Companies should
conduct regular audits and assessments on an ongoing basis to make sure
suppliers are keeping pace with their business.
15. Doing business today is hard, and it’s unlikely to get any easier. Small and midsize
companies that are aware of these supply chain challenges—and take proactive
steps to address them—will be in a much better position to capitalize on their
supply chain’s ability to serve existing customers better, operate more efficiently,
penetrate new markets and, overall, grow more profitably.
