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5 Reasons Why a Supply Chain Fails

By | Karen Anthony

With the increasing competition in the supply market, every business runs to meet its customers’ demands in the shortest time possible. This calls for every company to upscale its marketing strategies to overcome the trending competition. But the question is, are there any mistakes made by supply chains? Of course, there are many challenges experienced by the supply chains, and if not addressed in time, they may lead to the future collapse of significant businesses.

Therefore, in this article, we will look at some of the reasons why most supply chains fail in their operations. A company may have experts in various sectors such as automotive, consumer goods, and electronics. Without a clear supply chain strategy, the company’s most significant possibility lasting only a few years. However, checking on the following areas can salvage the company’s life.

  1. Poor Communication

Communication is a vital aspect of any business. Customers need to be informed of any changes in the product quality, delivery time, price fluctuation, and even specifications of every service offered. There are several cases where suppliers fail to communicate with the customers about the changes made in their products and services. They presume that their customers will adapt to the changes in time.

This marks the first reason why the business may not last long. Why? Several supply chains provide similar goods and services, and if they make clear communications with their customers, those working on assumptions stand to fail. Remember, if the supply chain is not delivering the right products to the customers at the right time, price, and documentation, it will not meet its customers’ demands. In the long run, the business will likely lose a vast network of customers and even the account. Therefore, a supply chain needs to improve its communication, and pro-actively involve customers in any delays or obstacles.

  1. Lack of Industry Experts

Mostly, a company finds itself spending a lot of time and extra dollars doing extra work on transporting the products to the customers, yet its not the core purpose of the business. This is likely to happen in a company that does not have knowledgeable industry experts in air, ocean, rail, and road logistics. Lack of such experts can lead to the failure of major supply chains.

How? A company will spend a lot of time and money delivering inappropriate products to the customers, and the effects may not meet the customers’ expectations. What if there comes a company with experts in shipment logistics? There will be increased competition, and most consumers will shift to the bright side that gives appropriate services. Therefore, supply chains need to employ industry experts that will help in saving extra coins and time. This will not jeopardize the benefits of the company and make more profits.

  1. Delays in Shipments and Long Lead Times.

Anything can happen during the shipment of the products. Such uncertainties include; port strikes, delayed manufacturing, inadequate shipping space, theft, fires along the way, and delivery traffics. The business is all about supplying and meeting the consumer’s demands. However, such uncertainties may delay the supply of the products to the consumer, which may cause supply chain failures. These delays also put everyone at risk, both customers and suppliers.

This is experienced where the consumer is asked to pay for the products before delivery. In such cases, customers will lose the money paid for the products while the supplier may be asked to pay a certain percentage. Depending on the agreement signed between the consumer and supplier, both parties are likely to share the losses. Regardless of such situations, the suppliers have to maintain positive communication with the consumers. The consumer is expected to understand the inevitability of supply risks, hence keeping the suppliers’ trust.

  1. Lack of Risk Management Policies

How strategic is the supply chain to handle future risks? Is it prepared to meet the supply risk, or is there no risk management policy set aside to help during uncertainties? Most supply chains will relax once they realize they have achieved their efficiency. For instance, they may have met almost 99% of their consumers’ expectations, a good supply report, positive customer feedback, a growing profit margin, and an ever-increasing consumer network.

When the supplier thinks everything is flowing smoothly, a single risk occurs and throws everything offshore. The company is then left to depend on their usual strategies to salvage its existence. What if it had a good risk management strategy set aside to help in such scenarios. Of course, the loss experienced would be much lower. Although risks are inevitable, a supply chain with little or no risk management strategy is bound to fail.

Therefore, every supplier needs to have a written plan on handling unexpected market trends and demands changes to minimize risks and maximize marketing opportunities. Additionally, various strategists can help develop a working method on how to manage supply risks.

  1. Shallow Supply Chain

Most companies will never realize the need to expand its supply chain. In case a company is asked how broad its supply chain, is commonly, many companies will look at the volume of their supplies and the consumers’ network.

What they forget is that depending on one supply chain is likely to overwhelm it. It might be working efficiently and meeting customers’ expectations, but a growth in consumers’ network calls for more supply chains. For instance, a company should think about the scenario where its supply chain fails to meet its commitments. This is a direct fall of the company. Therefore, a company needs a backup supply chain to meet the growing demands.

Conclusion

The above factors are a few reasons why most supply chains fail. As simple as they may look, failure to address them on time leads to jeopardized services and the falling business. Many supply chains overlook the above factors once they realize a growing profit margin, and they presume their customers will adjust depending on the market trends.

However, what they ignore is the increasing competition for the supply market. Therefore, every supply chain needs to address any challenges in their operations on time to avoid possible crushes.

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