What are Global Supply Chain Issues and Strategies for Success?
Every organization is affected by global supply chain issues. These seven issues will be crucial if you are to achieve success in global supply chain management over the next few years. These issues will impact your entire company, no matter how small or large they may be. Supply chain organizations are constantly facing challenges in the global economy.
These include, but are not limited to, global supply chain shortages and logistics, technology, quality control, customer service, and technology. To be competitive in their respective industries by 2023, Supply chain organizations must make progress toward strategic goals that will allow them to define the industry’s future for many years to come. This article will discuss the top seven global supply chain issues as well as how to fix them in 2023.
Why are there supply chain issues?
What are the global supply chain issues in 2023? Global supply chain issues can be extremely costly, especially if they are caused by a shortage of material.
Any disruption in the normal flow of goods between suppliers and customers is a supply chain issue. These disruptions could affect any part of the supply chain from shipping, warehousing, and logistics to manufacturing and distribution.
A supply chain problem can have a negative impact on brand reputation and customer loyalty. Customers will lose faith in retailers’ ability to stock shelves with certain products if they are unable to do so due to supply chain issues. Customers may look for other retailers that can meet their needs.
Supply chain issues can be caused by many factors:
- An absence of planning and preparation prior to placing an order
- Uncertain specifications on the product being sold or purchased
- Poor communication between departments in an organization about their respective roles and production delivery
Are there still supply chain issues in 2023?
Yes. However, the current economic environment is very difficult. High unemployment is the biggest problem. People who have been out for a while are finding it difficult to find work. To fill in the gaps in their workforce, some companies have turned to contracts to hire. It’s not sustainable.
Employers need to ensure they have enough workers to do the job, but they also need not hire too many people that leave them with insufficient staff. There are also other issues such as morale and retention rates, which can impact productivity if there aren’t enough people to do the job.
A major issue is how to deal with the global competition from low-cost countries like China and India. Their wages are often much lower than those we pay in the U.S., Canada, or Europe. Many companies have moved their factories to other countries in order to cut manufacturing costs. However, this has caused problems with supply chains as these goods are now returning to our markets at lower prices than what we would expect.
The Russia-Ukraine conflict, as well as the recovery from the global Covid-19 pandemic, are the most pressing global supply chain issues.
7 Global Supply Chain Issues & Strategies For Success
Events that occur anywhere on the globe can cause global supply chain problems. These events could include natural disasters or labor strikes. These disruptions can have a negative impact on business operations, financial performance, and customer satisfaction. These are the global supply chain issues that will be most critical in 2023.
1. Global Supply Chain Shortages
Global supply chain shortages are one of the most pressing supply chain issues facing businesses today. Because many raw materials are sourced overseas and then transported across oceans to their final destination, this is a problem. This can cause delays and other problems as well as increase costs for businesses that rely on these raw materials.
This is because there are not enough resources being used in the manufacturing process. Many businesses have turned to automation to meet demand and cut costs. This has led to more jobs being created for robots than human workers.
Strategies to Improve Global Supply Chain Shortages
One of the greatest challenges for businesses is a shortage of global supply chain materials. Third-party logistics providers (3PLs), which are often used by companies to solve supply chain problems, can prove to be a costly and time-consuming option.
3PLs are specialists in outsourced logistics services. They can offer a variety of benefits to companies, such as:
- Visibility into supply chain data has increased
- Better inventory management
- Forecasting that is more accurate
- Lower operating costs
2. Global Trade Slowdown
Global trade slowdown is one of the major factors that affect supply chains today. McKinsey & Company’s study found that global trade volumes have fallen by 8% in the past year, and will continue to fall by 5% by 2021.
This can partly be attributed to political events such as Brexit and the US-China trade war but also due to shifts in consumer preferences towards local production and consumption. There has also been an increase in competition from emerging markets such as India and Mexico, which have lower labor prices than Western countries. This has led to a significant shift in manufacturing locations away from China, which has resulted in a lower supply chain efficiency and increased costs for companies doing global business.
Strategies to Improve the Global Trade Slowdown
Companies must focus on their internal processes to combat this slowdown and not rely on external factors like currency fluctuations or tariffs. Better inventory management practices, such as JIT (Just-In-Time), replenishment systems, will reduce lead times and improve inventory turn rates.
3. The Rising Cost of Living
The rising cost of living is one of the 7 biggest global supply chain issues in 20222. Businesses of all sizes are concerned about the rising cost of living. It is important to monitor the changes in your supply chain and adjust your strategy accordingly.
The rising cost of living. The cost of living is on the rise worldwide. Businesses must be aware. Businesses will be forced to pay more for goods or services. This can have a negative impact on their bottom line. Businesses should look for local suppliers that can offer lower prices and not compromise on quality to combat this problem.
The demand for goods, services, and goods is increasing as the world population grows. This means that prices around the globe have risen. Even in high-elevation areas. Inflation is one thing. But when you add in other costs such as transportation, labor, and utilities, it becomes obvious. Why so many companies are having trouble with their supply chain right now? Optimizing your supply chain network is the only way to keep up and meet these rising costs.
Strategies to Reduce the Rising Cost of Living
Cost-reduction strategies are one way to cut costs. This can be done by looking at your inventory and determining how much is obsolete or old stock. If you feel that you are carrying too many inventory items, you might consider selling some or making use of them as part of an incentive program for employees (where they receive discounts on the products they sell). Another option is to examine your supply chain management process and make improvements. If there are opportunities to improve efficiency or reduce waste, For example, you can use more efficient packaging materials and invest in better tracking systems to know when each item requires replenishment.
4. Geopolitical Uncertainty
According to research, geopolitical uncertainty will be the biggest supply chain issue in 2022.
More than 1000 executives from different industries were surveyed for the study. It found that geopolitical uncertainties rose to first in the ranking of supply-chain issues. It was also the highest-ranked issued by companies in Europe, and the Asia Pacific.
With many partners and suppliers located all over the globe, supply chains are becoming more complex and global. Companies are therefore exposed to many political risks, which can cause disruptions or halt operations.
Talent shortage and skills gaps (31%) are the second most critical issue for supply chain managers, followed by cyber threats (29%). These issues were consistently ranked among the top three concerns in the last three years, according to researchers.
Other top concerns include compliance with regulations (25%), natural catastrophes (21%), as well as technology obsolescence (17%).
Strategies to Combat Geopolitical Uncertainty In The Supply Chain
Uncertainty in the supply chain is a result of the current geopolitical environment. This uncertainty can impact your supply chain operations as well as the way that you manage your supply base.
These are five strategies to reduce global uncertainty in supply chains:
- You should keep an eye on global events to identify any potential impacts on your supply chain.
- Prepare contingency plans to deal with any possible impacts such as trade restrictions or new tariffs imposed by other countries.
- Flexibility is key when sourcing products from other countries. This will allow you to adapt quickly to geopolitical changes and prevent disruptions to your operations.
- Technology advancements can allow you to monitor your supply base and manage it more efficiently. This includes data analytics tools such as artificial intelligence (AI), data learning (ML), or robotics automation software platforms that can help you make sense of complex data sets like supplier risk ratings and inventory management information systems.
- For your team to succeed at managing geopolitical risk, it is important to communicate to all members how crucial it is to be flexible and agile when dealing with these risks.
5. Semiconductor Industry Shortages
The shortage of silicon is a serious supply chain problem facing the semiconductor industry. The increasing demand for silicon chips has been fueled by AI and IoT. Between 2019 and 2024, the semiconductor industry will grow at 4.7% CAGR.
This problem is a constant challenge for chipmakers, who are constantly looking for new solutions. In the future, however, they will face challenges due to a lack of silicon availability.
There are many subsectors to the semiconductor industry: Memory chips, microprocessors, and analog ICs are just a few of the many types available (including sensors). More than half the industry’s revenue comes from memory chips that are used in smartphones and other mobile devices, where data is stored on flash drives or SD cards. Servers and PCs use microprocessors. They are an integral part of everyday life as they control everything, from traffic lights to air conditioners. An analog IC is used in automobiles and industrial equipment to control various functions, such as speed control or braking systems.
These are the challenges facing the semiconductor industry. Here are some strategies to help you get through them:
- Adapting to 5G networks
- It is important to maintain a competitive edge in AI technology
- Focus on new markets
6. Anti-Competitive practices
Many issues can impact your business due to the complexity of global supply chains.
Anti-competitive practices and unfair competition are just a few of these. The global economy of today presents risks for conflicts between domestic law and international law, as well as differences in legal standards.
Compliance with laws and regulations around the globe is another issue. There are many different standards of compliance in different countries. It is important to understand these differences and their implications for your business.
Your supply chain can also be affected by unfair competition. This could include counterfeiting and piracy, trademark infringements, trade secret theft, patent infringement, and trademark infringement.
These strategies can be used to solve anti-competitive behavior:
- To ensure that you are always offering the lowest price, use a business intelligence tool to monitor market trends and the prices of your competitors.
- To ensure that customers return to your store time and time again, provide excellent customer service.
- Your existing supply chain infrastructure can be used to your advantage by offering value-added services such as inventory management, returns processing, and order fulfillment that meet local customer needs in their time zone.
- Make use of new technology such as 3D printing and automation software to improve collaboration with suppliers and increase efficiency throughout your supply chain.
7. Extreme Weather and Natural Disasters
Natural disasters and extreme weather are increasing in frequency, and are affecting the supply chain more than ever. A majority (91%) of supply chain professionals have experienced a direct effect on their businesses due to extreme weather events.
Nearly half of the respondents (47%) also reported having been affected by a natural catastrophe in the past year. These were the top three most frequent impacts:
- Business interruptions can cause lost revenue
- Supply chains disruptions and logistics problems
- Supply chain recovery is associated with higher costs
Strategies to Combat Extreme Weather
External factors like extreme weather or natural disasters can be difficult to manage when it comes to global supply chain issues.
Companies must be prepared for extreme weather events in 2023 by taking measures to protect their supply chain from disruption. Here are some tips to help you do this:
- Make sure that your suppliers have contingency plans for extreme weather events.
- You should periodically assess the ability of your suppliers to weather extremes.
- If possible, ensure that your operations can withstand these events without causing significant disruptions or revenue loss.
For C-level executives and top-ranking managers, global supply chain issues are at the top of their priority list. Supply chain management is an evolving business function that requires creative strategies and problem-solving at every step. Quest Consulting has years of supply-chain management experience and shares seven strategies to help your business have a successful global supply-chain management system. This article focuses on the top seven global supply chain issues in 2023, and the strategies to address them.