Changes in global business coupled with the unpredictable consumer demand have led to businesses encountering problems when managing their supply chains.
Foggin, Mentzer, and Monroe allege “ We continue to see organizations adhering to the same supply chain management practices that they have been using for the past five to seven years” (2004, p. 829).
The use of these outdated supply chain management practices is the cause of the numerous supply chain problems that contemporary businesses encounter. This paper will discuss some of the symptoms of supply chain problems, their causes, and how to address them.
Symptoms of supply chain problems refer to indicators that help business operators to determine if their supply chains are underperforming. There are numerous symptoms that characterize an underperforming supply chain.
They include high cost, poor customer service, high inventory, and poor order-fill rates, among others. At times, supply chains exhibit all these symptoms simultaneously prompting managers to call for immediate redress (Foggin, Mentzer & Monroe, 2004).
High cost in supply chains refers to high expenses incurred in managing the supply chain. This could be in the form of storage expenses, shipment costs, and salary expenditures. High inventory refers to a situation where a lot of products take long before leaving the supply chain.
Poor supply chain management leads to products taking long in the supply chain before reaching the consumer. This contributes to an increase in products within the inventory, which adds to the supply cost.
As a sign of supply chain problem, poor customer service is characterized by late delivery and shortage of products in the inventory.
Poor order-fill rates arise when staff working in the supply chain fails to replenish inventory on time. This leads to a company losing the majority of its customers to competitors (Foggin, Mentzer & Monroe, 2004).
High inventory refers to a situation where products amass within the supply chain’s inventory. One of the causes of high inventory in the supply chain is poor inventory management practices.
Individuals managing the inventory fail to consider factors like “demand and demand variability, supply lead time and lead time variability, supply chain design, manufacturing capabilities versus customer purchase characteristics, and transportation modes, among others” (Peck, 2005, p. 214).
Failure to consider these factors leads to staff ordering for products before the available ones are cleared from the inventory. In the process, the inventory gets clogged with products.
In many cases, businesses strive to align their inventories with the set financial objectives without putting into consideration the factors that influence inventory levels. Eventually, companies end up overloading their inventories.
Poor customer service
Peck asserts, “Supply chain management is directly related to a company’s customer service” (2005, p. 219). Poor customer service occurs in the form of late delivery of products to customers.
Staff managing the supply chain fails to respond to customers’ orders on time leading to late delivery of products. On the other hand, poor management of supply chain may lead to an organization running short of certain products.
Consequently, the organization is unable to satisfy the needs of its customers. Failure to monitor the products being delivered to customers is another factor that contributes to poor customer service in the supply chain.
The products may fail to reach the expected destination while some get spoilt during shipment. This leads to a company not meeting customers demand and might lead to the respective company losing its loyal customers to competitors.
Organizations can use a number of measures to solve the problems of high inventory and poor customer services in their supply chains. To address the problem of high inventory, organizations ought to revise their ordering cycles and quantities.
Organizations may opt to increase the number of orders they make per week or month and reduce the number of products per order (Christopher & Towill, 2002). Ordering products in small amounts help organizations to avert chances of high inventory problems.
Moreover, organizations need to enhance their forecasting techniques. Poor forecasting leads to organizations ordering more products than the market requires. Hence, such products remain in the inventory for a long time leading to high inventory.
High inventory problem may also be solved by eliminating obsolete products. Organizations ought to write-off all products that have stayed in the inventory for a long time.
Organizations need to use inventory management software to enhance customer services in their supply chains. The software helps business institutions to monitor their shipments, orders, and inventory levels.
Inventory management software helps organizations to sustain desirable inventory levels. Therefore, organizations are able to satisfy all customers’ needs promptly (Yang et al., 2007).
In addition, the software assists business institutions to monitor products under transit, thus ensuring that they are transported to the right destination.
Another approach that organizations can use to address the problem of poor customer services in the supply chain is employee empowerment. Employee empowerment would encourage staff to come up with novel strategies to enhance customer services.
Christopher, M. & Towill, D. (2002). Developing market specific supply chain strategies. International Journal of Logistics Management, 13(1), 1-14.
Foggin, J., Mentzer, J. & Monroe, C. (2004). A supply chain diagnostic tool. International Journal of Physical Distribution & Logistics Management, 34(10), 827-855.
Peck, H. (2005). Drivers of supply chain vulnerability: an integrated framework. International Journal of Physical Distribution & Logistics Management, 35(4), 210-232.
Yang, H., Choi, B., Park, H., Suh, M. & Chae, B. (2007). Supply chain management six sigma: a management innovation methodology at the Samsung Group. Supply Chain Management: An International Journal, 12(2), 88-95.