3 Common Supply Chain Problems
Before the global pandemic that took the world by surprise in early 2020, supply chain problems were sporadic at their worst. However, over the past couple of years, there has been a growing concern with the stability of the supply chain both here and abroad. Many of our current concerns are still the result of problems arising from the pandemic even though the number of new cases has fallen significantly.
Some of these issues will resolve themselves over time but some will continue to be a cause for concern among businesses and consumers alike. Here are three of the most common supply chain problems which may not be easily resolved without strategic human involvement.
1. Scarcity in Materials for Production
This common supply chain problem actually manifests in two main ways. The initial problems caused by a scarcity in materials for production lead to a shortage of manufactured goods ready for market. However, there is a much greater problem than a shortage of merchandise.
In an effort to obtain parts and materials for production, some companies have been forced to order inferior materials. This has led to major complaints on the receiving end which is why a huge number of businesses are demanding SCAR quality resolutions. SCAR stands for Supplier Corrective Action Request. Whether the merchandise shipped was of inferior quality or the merchandise didn’t arrive as contracted, the receiving company is within their rights to request (demand?) an explanation of how this issue arose. They have the right to know what corrective measures the supplier intends to institute.
2. Personnel Shortages
Sadly, the pandemic took a high toll on lives around the globe. This has led to a shortage of personnel in literally every industry imaginable. Not only are hospitals losing doctors and nurses, but all customer facing industries are suffering as well. Much of it is the result of covid infections and/or deaths but some shortages in workers are due to displaced people.
There is also a great number of former employees who now are tasked with caring for family members who lost their caregivers to the virus. Industries hard hit by personnel shortages are shipping as well as manufacturing. It is difficult to move products from manufacturing to distributors and/or retailers if there is a shortage in shippers alongside a shortage of workers in manufacturing.
3. Rise in Shipping Costs
Some of the higher shipping costs are directly the result of a rise in the cost of fuel. Unfortunately, even though the cost of oil per barrel has gone down, the cost of fuel continues to rise. There is no reason to believe prices will lower any time in the near future, so shipping costs are forecast to remain high. This, in turn, will probably continue to have a negative impact on timely shipping.
The other reason why shipping costs have risen is also due to a lack of qualified workers in every mode of transportation. From truck drivers to airline freight workers, the shortage of personnel has also resulted in higher shipping costs. With that said, the SCAR quality report may bring about potential corrective measures not considered until a detailed assessment of supply issues sheds light on underlying causality.
The bottom line is that no problems in the supply chain can be corrected until their root cause is determined.