A man lies awake in bed © 123RF
A man lies awake in bed © 123RF

The six worries keeping supply chain leaders awake at night

21 March 2016

Resource availability, talent shortages, supply chain complexity, risk, compliance and cost are the main issues which keep procurement professionals awake at night a study by APICS and Michigan State University (MSU) has found.

For the report, supply chain executives at 50 companies were asked to assess both new opportunities they are evaluating and the challenges that keep them “awake at night”.

The study found that six main worries predominated:

• Capacity and resource availability. This included replacing old equipment with state-of-the-art machinery and avoiding outsourcing where possible. One firm experiencing strong growth talked about a plan to do “selective outsourcing” on a temporary basis until new equipment became operational. A company offering innovative products with skyrocketing sales worried its current infrastructure and staff could not continue to support all of the firm’s needs.

• Talent. Many companies were concerned about hiring for supply chain jobs in the face of intense competition. Retention was a concern because of “millennials’ job-hopping habits”. One respondent lamented that he couldn’t find an industrial engineer “worth his salt” who could think strategically.
• Complexity. Many firms’ products are becoming more complex and the amount of stock keeping units (SKUs) is exploding. With new products, firms often do not have experience with suppliers or the benefit of that leverage that growth in existing products presents. Another participant expressed that complexity drives “a ton of costs” and hitting product cost targets was becoming more difficult as a result.
Threats and challenges. These included supply chain risks ranging from natural disasters to troubled suppliers and continuity planning. Respondents worried about how to decide when to invest in resilience, and one respondent referred to new markets as “the ever-evolving challenge” with respect to scalability. Reputational damage caused by supply chain risk was also a significant worry.
• Compliance. These issues included product regulation, trade controls, and continually changing regulations as well as constant new regulation related to trade compliance, anti-dumping, and customs, which “is adding vast complexity to the supply chain”.
Cost and purchasing issues. While price pressures could affect any type of industry, healthcare and pharmaceutical firms were noted as the top industries impacted.
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