Supply chain disruptions cause 84.6% of increased labor, and inefficiencies can slowly erode profitability. 

2024 marks the beginning of marked improvements in supply chain management as industry leaders adopt new tools and technologies.

It's in every business leader's best interest to stay informed about potential issues affecting their supply chain this year. Is your supply chain management strategy enough to combat disruptions and associated costs?

Why Should Supply Chain Management Be Your Priority?

When supply chain disruptions occur, the consequences are difficult to contain. What are the negative consequences of poor supply chain management?

  • Decreasing production: Without the necessary raw materials, there will be a decrease in production. With production rates declining, you will be wasting resources on manufacturing labor with a low productivity.
  • Diminishing customer confidence: If customers do not receive their orders, they will have a negative impression of your business, and it will take work to restore the relationship and trust.
  • Diminishing sales and revenue: Without inventory to sell, you will have fewer sales, and your revenue will plummet. Since you will still need to cover labor and business costs, it's in your best interest to avoid stockouts and disruptions with extensive measures.

At present, there are an enormous number of issues that could affect your supply chain, and hypervigilance is the best approach.

6 Issues To Resolve For Supply Chain Management

What should you be vigilant of in 2024 to keep your supply chain moving fluidly? Educating yourself on challenges and issues to address in your supply chain is beneficial in preparation for the year ahead.

Human Error

Although economic, global, and political events can affect your supply chain, every business should limit the potential for human error. Failing to identify reorder points, manage inventory, and submit restock orders can have devastating ripple effects. Mitigating human error in your supply chain involves implementing automation tools.

Poor Demand Forecasting

There are several factors that affect demand forecasting, including:

  • Product composition changes.
  • Changes in locations and facilities.
  • Competitors.
  • Geodemographic changes.
  • Vendor pricing increases.
  • Seasonal changes.
  • Consumer trends.

In the age of social media, predicting consumer behavior is more challenging than ever. As we saw with the purchase of toilet paper during the 2020 pandemic, consumers are easily influenced by the media. Predicting trending topics and demand surges can challenge modern business.

Additionally, the current rate of inflation could mean you need to change suppliers for product components, which could affect product consistency and cause a drop or increase in demand.

Vendors and stores that sell your merchandise may also need to increase their sales prices due to the costs of inflation, which could affect product popularity and customer loyalty.

The financial crisis and the emergence of social media trends and fads can make forecasting unpredictable in 2024. Poor demand forecasting has a domino effect on the rest of your business, and this issue should be front of mind for your yearly plans. 

Resource Scarcity

In 2024, 91% of industrial businesses reported experiencing resource scarcity. Without the raw materials and components required to resume production in your supply chain, you could be faced with a drop in productivity and lost sales.

Resource scarcity is on the rise, and to protect your business, you should research product components and find suitable alternative materials and sources should a scarcity arise.

Consumer Trends

We live in turbulent times, and there are several factors influencing consumer trends and habits, including:

  • Online shopping has become increasingly popular, overshadowing retail and changing how consumers shop.
  • Inflation has made many consumers much more frugal, seeking the best price or eliminating luxuries from their everyday routine.
  • Supply shortages are forcing consumers to explore alternatives to their usual purchases.

All of these factors influence the way consumers behave. The last few years have been an influx of disruptions and challenges on a global scale, and future disruptions are difficult to anticipate. Maintaining awareness of global events can help businesses stay aware of the latest developments and threats to their operations.

Inflation 

Inflation has affected the globe since the pandemic, and the prices for manufacturing goods and raw materials have also been affected. When inflation affects your supply chain, you can seek different suppliers or raise the price of your products. 

Port Congestion

With the current spike in e-commerce and international shipping, we are seeing many more instances of port congestion. When port congestion occurs, offloading and loading cargo ships takes longer, as there is a backlog of ships queueing at the port. 

When this happens, your business is affected. Your inventory will take longer to arrive, and you could experience stockouts. Stockouts, in turn, compromise customer loyalty and place your profits at risk.

Port congestion is a priority issue for your supply chain management strategy to address in 2024.

How Are Businesses Preparing For Supply Chain Challenges?

With issues mounting for supply chain management in the year ahead, it's beneficial to employ new tools, technologies, and methods.

Adopting Demand Sensing

Demand sensing is a new type of demand forecasting that allows you to gain insights into predicted demands in real time. The technology features machine learning that analyzes consumer behavior, such as carts, wishlists, and purchases, to predict demand in the upcoming hours and days. 

Demand sensing is one of the best ways to stay ahead of changing consumer behaviors, which have been particularly volatile in the past few years. If there is a sudden uptick or downturn in sales, you will know hours in advance, allowing you to adjust your supply chain management strategy in an agile and responsive way.

External Macro Forecasting

In addition to adopting demand sensing for your forecasting, you can use external macro forecasting to prepare your business for today's turbulent times. This type of forecasting is predicated on wider global and economic forecasts.

However, since global events and economic shifts can be difficult to predict, this type of forecasting is less reliable. Depending on the industry you're operating in, however, it can be beneficial to your approach to future global shifts and events—making sure you have a clearer view of potential future outcomes.

Inventory Management Tools

Improving and automating the inventory management process improves agility and insight for your supply chain. Manual stock counting methods are quickly replaced with RFID technology that allows workers to scan inventory and log it in a digitized system. 

Removing the margin for human error in the inventory management process provides more accuracy to limit the potential for stock outs while reducing repetitive and time-consuming labor.

However, the reach of modern inventory management tools extends far beyond this. You can gain many benefits with an inventory management system:

  • Integrated data: If you can integrate your sales orders with your inventory management software, you can receive alerts or even automate purchase orders to restock. Failing to monitor sales orders in line with inventory leaves room for stockouts, and by automating this process, you eliminate the potential for human error.
  • Forecasting: Modern inventory management tools provide you with forecasting based on your previous sales data. It can detect seasonal trends and make predictions for your sales figures and inventory requirements based on your business's performance over the last few years.
  • Multichannel inventory management: Inventory management software allows you to integrate all your sales data, meaning you can track sales for both your online and retail stores. Removing data silos in your supply chain leads to unified insight.
  • Traceability: By using RFID tracking for your products, you ensure they're entirely traceable. Should an inventory item expire or require a recall, you will have accurate knowledge of the inventory's location.
  • Reorder points: To automate stock orders, you can set your own reorder points based on your experience.

By implementing an intuitive and accurate tool, you can forego the potential for errors and remove one of the largest threats to your supply chain management.

Final Thoughts

Supply chain management is the foundation for protecting profits and meeting consumer expectations. But, many companies are struggling to stay ahead in such an adverse climate. Port congestion and resource scarcity seem impossible to overcome, but planning and strategizing can help you devise plans for these occurrences. This will be an adverse year for e-commerce and manufacturing companies.