The supply chain is rife with challenges at the best of times, from natural disasters to shifts in supply and demand — and events such as the pandemic and the Ukraine-Russia conflict have made things even tougher. Now more than ever, businesses must look out for potential supply chain inefficiencies and ensure they’re doing what they can to minimize them.
No business owner or manager doubts that inefficiency is bad, yet they sometimes fail to realize just how far-reaching the implications can be — especially regarding supply chains. A mistake at one stage in the chain will impact everything else, literally causing a “chain” reaction. Solving these problems is far more costly than preventing the inefficiencies in the first place, so let’s examine some common root causes — and how to stop them from holding you back.
The supply chain and inefficiencies
The manufacturing process is highly precise, meaning it’s very sensitive to small details — the tiniest mistakes can have a massive impact.
For instance, a factory producing cars would need to use metal sheets of a specific size. So, if the metal arrived and turned out to be slightly too big or small, the factory wouldn’t be able to use it. The company would then have to spend an excessive amount of money on importing metal of the correct size, most likely from a far-off destination.
These mistakes aren’t just expensive — they waste time, cause delays, and leave customers unhappy.
With many supply chains still recovering from the delays and shortages that came during COVID-19 and geopolitical tensions, making last-minute replacements isn’t just a pricey inconvenience. It’s also extremely difficult, and sometimes downright impossible.
But why are these problems occurring in the first place?
Supply chains are interconnected with internal operations, and that’s where many things are going wrong.
A 2020 report from Resilinc analyzed supply chain disruptions and found that 83% of the problems they found were caused by human error. Believe it or not, one of the biggest culprits for inaccuracies in the supply chain is Excel. If someone accidentally enters an extra number on their spreadsheet, it can result in ordering the wrong quantity or measurements.
It might sound careless, but some estimates suggest that the average purchase order needs to be adjusted five times, with multiple people involved in the process. It shouldn’t come as a surprise when things go wrong, especially when you consider that Excel doesn’t offer any way to see real-time updates, making it tough to check for errors or last-minute changes.
Plus, most supply chains lack visibility and coordination, meaning workers involved at one stage in the chain are disconnected from all other stages. Then there’s the possibility of cyberattacks and the usual supply chain issues, such as fluctuating supply and demand and problems with logistics (like bad weather).
How to make supply chains more efficient
So now we come to the million-dollar question: How can we make supply chains better and more efficient?
When the supply chain is failing, the broad reason behind it is systems that are failing. So, the clear solution is a better system. Pay some attention to how your processes are running, including:
Let’s start with people. Instead of pointing the fingers at employees who make mistakes, ask yourself why this is happening in the first place. Are they overworked and therefore more likely to make errors? Or maybe your processes don’t allow an opportunity for everything to be checked and verified, resulting in errors being missed. Map out exactly what your supply chain looks like and what happens at each stage, then identify potential risks along the way. Are there any you can minimize, or maybe you can create an emergency response for the worst-case scenario?
Then there’s the technology. Nowadays, Excel can be replaced by an AI-driven solution that does a better job at detecting human errors. In fact, it can sometimes combine with IoT technology to track exactly what is happening with an inventory. Also, while Excel doesn’t facilitate collaboration or offer ways to see real-time updates, plenty of other tools do.
Finally, even if you do encounter an error that results in a delay, the least you can do is keep customers updated on what’s happening at every stage to mitigate their frustration. It’s now possible to track a shipment throughout the supply chain — why not provide this data to your customers?
Kiss those inefficiencies
Even if you haven’t yet experienced a major error due to supply chain inefficiencies yet, it doesn’t mean you shouldn’t start protecting yourself against them today. No business is immune, especially one that isn’t following the advice outlined above.
About the author:
Cornerstone Paradigm Consulting, LLC is an industry-agnostic global business operations consulting firm, that goes beyond the symptoms to get to the root cause of your business issues.