The supply chain industry around the world is exposed to different regulations and these regulations are subject to change due to many factors. Politics, terrain, infrastructure, and much more effects the supply chain process and cause unwanted interruptions. Furthermore, these risks are associated with financial, social, and operational ramifications.
To see how the supply chain behaves these uncertainties and risks are thoroughly studied because they keep on evolving with time. When the goal is to provide efficient service to the customer risk is not the only factor we should consider while making decisions. Focusing on resilience, capacity to respond, vulnerability, and process efficiency has proven to be the important factors in predicting the outcome. Time on the other hand is an essential factor or we can say that time and risk are the two faces of the same coin. Time plays a vital role in transforming the risk.
Change brings more risks
Besides all the risks that we mentioned earlier, shifts and changes in technology should also be accounted for. Constant evolution in consumer behavior, demand, an assortment of products, and complex supply chain processes have largely contributed to the uncertainty. To deal with these factors companies around the world are putting in more resources to study emerging market trends.
Lowering the uncertainty
When we talk about the uncertainty in the supply chain, we mean changes in profitability and fulfillment which are commonly caused by unpredictable events. Similarly, it is very difficult to make decisions when things are ambiguous. Events such as hurricanes, earthquakes, last-minute orders, delays by suppliers, or unnecessary delays in the production process. Although many external information sources can come in handy when assessing these external risks, there are no tools or ways readily available in the market to help lower these uncertainties.
Inventory
Responding to the demand of the market is the key aspect of an effective supply chain process. Inventory is an internal factor that can be widely controlled by studying demand patterns. The way we optimize the inventory defines how we deal with the uncertainty of demand as well as offer.
Most often we should keep an eye on the factors causing the inventory out of sync. Is it due to dropping below the optimum level or going above? Discovering the reasons behind these factors can tell us more about the uncertainty we have to deal with when optimizing our inventory.
The internal or external data that is essential to manage an optimized inventory level also play an important role. Late deliveries, customer reviews, quality issues, and much more are some examples.
Maintenance
On a production, line breakdown can cause big issues and this factor contributes to being the most important factor when dealing with uncertainty in the supply chain process. Companies must be prepared to deal with any kind of maintenance breakdown during high-demand times. Having this issue managed you can widely avoid problems related to delivery, supply, and customer service. Technology integration can also help reduce the probability of breakdown.
To sum up we must say that companies must use all external and internal data resources to have a better understanding of uncertainties associated with the supply chain. No defined rule can be applied to all. Internal factors can be managed by integrating smart technology innovations while external factors can also be addressed using external data sources. It is more of a combination that works differently in different cases. The way we see our internal operations and manage them efficiently is the key to minimizing the internal risks associated with the supply chain.
