According to the Council of Logistics Management supply chain is “the process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in process inventory, finished goods and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements.” In supply chains used by the companies there are lot of assumptions and inefficiencies present and the key challenges faced by the companies in the supply chain management are here under:
Effective supply chain management is all about delivering the right product in the right quantity in the right condition with the right documentation to the right place at the right time and at the right price. Any problem arising in the above process can be solved by rectifying the problem with the use of many SC models.
Planning and Risk Management:
The supply chains must be planned and evaluated regularly and redesigned with the changing new product launches, global sourcing, new acquisitions, credit availability, the need to protect intellectual property, etc. The supply chain risk must be identified and quantified. SCOR helps to identify the potential risks and easier coordination with customers, suppliers and other stakeholders. It helps users establish rules and strategies, assign responsibilities, coordinate responses, and monitor current conditions.
The operating costs of supply chains are increasing because of rising freight prices, technology upgrades, rising labor rates, expanding healthcare costs, rising commodity prices and so on. To solve this problem there are number of metrics with which one can measure the success achieved in implementing the SC. The SC managers have to take the correct decisions if the objectives are not achieved.
Supplier relationship management:
Suppliers, different departments in the same organization some times follow different methods in implementing and measuring the performance and the results, this could be a problem if the results are not matched. Some models of SCM provides a common language for supply chain classification and analysis which makes easy for teams to communicate, speeds benchmarking efforts, and enhances the evaluation of best practices.
Supply chain leaders need a thorough understanding of the key competencies required for supply chain management roles, specific job qualifications, methods for developing future talent and leaders, and the ability to efficiently source specific skill sets.
An organization should be very well planned in order to overcome challenges in SC. Overcoming these challenges in SC will only ensure success in the business.