5 Biggest Challenges Facing Global Supply Chains Today
Organizations managing a global supply chain face a variety of unique challenges. Customers today expect efficient, on-time deliveries, and companies need a robust supply chain strategy to make it happen. Fluctuations in the global economy and changing political climates make the supply chain even more difficult to navigate.
At Unilog, we help our clients navigate the ever-changing global supply chain. As a 4PL provider, we provide end-to-end services, from inventory management to finding shipping partners. Our innovative Logivice software program serves as a control tower for your entire supply chain, compiling a broad range of data to help you stay on top of your orders.
Comprehensive supply chain support gives our clients the resources they need to tackle whatever challenges come their way. In this article, we’ll talk about some of the biggest challenges facing global supply chains today and what organizations can do to manage them.
Climate change is a problem that will have far-reaching effects for virtually every industry over the next few decades. Parts of the supply chain have already been affected as climate change has caused extreme weather patterns around the world.
For example, hurricanes have become much more intense in recent years, while floods and wildfires have become more frequent. Natural disasters like these can disrupt the entire global supply chain if they happen in an area with a large volume of warehouses or manufacturing facilities. In extreme weather situations, shipping trucks, boats, and planes won’t be safe to operate and therefore can’t run their regular routes.
Additionally, water levels have dropped in many rivers and other key waterways throughout the world due to draught. This has forced shipping companies to rethink their water routes. Seaports around the world are already heavily congested, and these global changes have made the problem worse.
These extreme weather events are very costly for suppliers to deal with. To safeguard your supply chain against unexpected weather events, consider working with multiple suppliers and shipping partners in different parts of the world to create redundancy. Another option is to work with suppliers in your own country or state when possible. While this won’t prevent extreme weather events, it gives you other options to prevent the entire supply chain from shutting down when they do happen.
Tensions between key manufacturing countries throughout the world can also slow down the supply chain. For example, the Russo-Ukrainian War has forced many companies with operations in Europe and Asia to develop new shipping routes, which are often less efficient than their previous ones. Tensions between the US and China are another example of international politics affecting the supply chain.
Political tensions affecting the supply chain can range from wars, revolutions, and large-scale protests to sanctions, tariffs, and shipping restrictions. This is another situation where diversifying your suppliers can help you minimize shipping delays.
Labor and Material Shortages
Economic and cultural trends combined with unpredictable world events have resulted in damaging labor and material shortages. As COVID-19 spread throughout the world, workers who got sick typically had to take at least two weeks off of work, which limited production. Labor strikes and shortages have also become very common around the world as the workforce grapples with changes in working conditions and compensation.
Material shortages have also affected the global supply chain in recent years, which has had a domino effect on other industries. For example, the construction industry has been affected by shortages of lumber, steel, and other key materials. A shortage of semiconductor chips has also had a huge impact on many different industries, including consumer electronics and automobiles.
Both of these shortages have made it difficult for organizations to stick to their manufacturing and shipping timelines. Building a stockpile of inventory insulates your business against material shortages. Many companies now use automated technology to predict demand levels based on past consumer patterns, which you can use to build an appropriately-sized stockpile. Using alternative materials when possible can also help you keep your supply chain running in an emergency, although it may not be a viable long-term solution.
Managing a labor shortage is a more difficult challenge. There are a variety of things to consider when it comes to attracting the right team. Are your compensation packages appropriate for your local labor market? How do your working culture and conditions compare to your competitors? When choosing suppliers and shipping partners, it’s important to make sure you’re aligned on hiring strategies and that they know how to keep their positions staffed consistently.
Inflation has become a major economic concern over the past year, affecting the supply chain in a variety of ways. Manufacturing and shipping costs have risen, forcing companies to rethink their budgets. Many organizations pass these increased costs on to their customers, but this can backfire. Inflation and cost-of-living increases mean that consumer spending power has diminished, which can result in reduced demand in some cases. Navigating inflation requires thoughtful budgeting to cover increased costs without pricing out your customer base. At Unilog, we help our clients find cost-efficient supply chain solutions to balance out increased expenses.
Congested Port Systems
Many of these supply chain problems have led to congested ports in some of the world’s largest cities. During the COVID-19 pandemic, many consumers started ordering their essentials online, causing shipping volumes to spike. Over two years later, shipping volumes are still very high, and many ports don’t have the infrastructure to manage it. Extreme weather and political conflicts around the world have forced suppliers to adjust their shipping routes, which has made congestion even worse in some areas.
These global challenges are will continue to affect organizations across many different industries. To keep your supply chain running smoothly, it’s important to be aware of these ongoing challenges and continually adjust your supply chain strategy. Working with a 4PL provider like Unilog takes time-consuming supply chain management tasks off your hands. We optimize your supply chain to keep your shipments running on time despite changes in the global economy and political landscape. Contact us today to learn more about our comprehensive supply chain solutions.