- Quantifying by spend
Most companies prioritize functions based on spend. This is a costly mistake in supply chain optimization. Some organizations find that they spend up to 80 percent of their total expenditure on their top 20 suppliers. They, therefore, organize their resources with these suppliers as a priority. While this practice worked well in the past until the emergence of outsourcing, it cannot work now. With the current demands of the customer, supply chains that rely on a single source are likely to suffer and cause pain to the customers. A disruption of that single supplier is likely to cause far-reaching problems. Most suppliers without an alternate source can become a single point of failure for a business. As a manager in the supply chain, consider the financial impact of losing when using a single supplier.
- Rushing to launch new systems
Many companies believe they can launch new systems and protocols in fast successions without testing them properly. They fail to get advice from an outsider who has knowledge of blind spots that are often overlooked before they lock themselves into massive deals or expansions. Although these expansions or deals are important, companies must ensure that they will not be disrupted or will not run into problems before launching new products or entering multiple partnerships or deals. With these in place, you can try beneficial partnerships as long as you are sure your operations will not be disrupted.
- Issues with Visibility
Visibility is one of the leading critical components that modern supply chains must have. Sadly, most supply chain companies lack visibility across their dependencies, making it a challenge not only to the customers but also to the managers. This problem should never be tolerated in today’s globalized environment. Without visibility, managers will fail to know where their products come from, and this undermines supply chain optimization. Supply chain managers know that a lack of visibility is a problem, but some make the mistake of failing to ensure visibility in their supply chains. They do not take the necessary steps to correct the identified problems and fail to recognize that lack of visibility is a real problem.
- Poor risk management
Supply chain optimization presents many risks. Some of these risks include delivery delays, increases in product demand, quality concerns, supplier issues and shortage of supplies. These risk factors make risk management a complex and dynamic process that requires an organization to implement short-term solutions, one after the other. Short-term risk management means managers will have trouble assessing issues in their supply chain. Aspects such as cost savings, time to market and inventory turnaround also contribute to the short-term goals. Managing risks is the easiest thing in the supply chain process, and managers must tie their efforts to mitigating risks.