Supply chain management can be a tremendous asset for companies because it can reduce costs, improve the profit margin, and offer a better return on investments. However, those advantages do not mean there are no potential problems related to supply chain management that companies may need to deal with. Most of the problems involve a lack of control over one of more of the following three areas: data, technology, or vendors.
One of the biggest problems many supply chain management systems face is a lack of quality data. Many businesses simply fail to realize that the supply chain results can only be as good as the data the system or software is using. Obtaining and using quality data involves a few considerations that are often overlooked by those in charge of SCM. First, size does matter when it comes to data. In order to do proper forecasting, the predictions must be based on data from a large enough sample. If only one or two orders are used as the basis for the predictions, the results are likely to be quite unreliable. Additionally, many people do not realize how quickly data can change or how much that it can vary even in short periods of time. For these reasons, SCM data must be continually re-evaluated and refined so that it matches reality.
Another big issue is the technology required to bring supply chains onto the Internet. While some companies have been at the forefront of adapting integrated, Internet-based supply chains, others have been reluctant to take the next step. As a result, it can be difficult to get all vendors and suppliers on board. There are many good reasons why vendors may shy away from the new technology. After all, the installation of the necessary hardware is costly and time-consuming.
Finally, sometimes the vendors that these systems are supposed to connect with have undermined many SCM systems and implementations. The reality is that in setting up a supply chain not everyone is going to see the benefits immediately. In the long run, being a part of the supply chain will be beneficial to all of the companies involved. However, initially, not everyone will benefit equally. Therefore, some partners in the chain may feel disillusioned or may feel unimportant in the overall sequence. In fact, some companies may even be afraid of losing their overall competitive advantage as a result of joining the supply chain. For all of these reasons, many companies simply aren't jumping on the integrated supply chain bandwagon.
Obviously, all of these problems are to some extent beyond the control of supply chain managers. No matter how skilled, an individual cannot make a vendor join the supply chain if he or she is in complete opposition to joining. However, in most cases, the right approach can solve the problem. With the quality of the data, for example, employees in charge of forecasting need to be trained and need to thoroughly understand the steps necessary to ensure the quality of the information they base the system on. Good training can go a long way to improve the data and the overall effectiveness of SCM.
With the vendors, suppliers, and other necessary elements of the supply chain, companies need to take a different approach. They need to meet with the decision-makers in those companies and outline clearly for them the benefits of the technology and the supply chain for them. They should clearly discuss how long it would most likely take for them to fully achieve those positive results. Additionally, they must be able to demonstrate how the business's investment in the technology will pay off for the vendor in the long run. If companies can deliver a firm argument based on facts and accurate statistics, it is more likely that vendors will be able to buy into the argument for the integrated supply chain.
Essentially, supply chain management is a tremendous asset for businesses and it usually does help improve the bottom line significantly. But getting those positive results means overcoming some common obstacles to change in order to regain control over the SCM implementation and system.