Capacity and resource availability, talent and complexity are among the business challenges supply chain managers most worry about, according to a new report, titled “Supply Chain Issues: What’s Keeping Supply Chain Managers Awake at Night?” Based on the results of a survey to investigate business practices of supply chain organizations and identify critical issues, the paper is part of Supply Chain Management: Beyond the Horizon, a multi-year research project conducted by Michigan State University’s Eli Broad School of Business and supported by the APICS Supply Chain Council and the John H. McConnell Chair in Business Administration at MSU.
This stage of the project investigates the current business practices of more than 50 firms through surveys and interviews with executives to determine which critical issues executives are “wrestling with.” Specifically, they were asked, “What keeps you awake at night?”
Capacity and resource availability was the issue foremost on the executives’ minds. For instance, most of them are concerned with a broad range of activities aimed at maximizing the firm’s facility capacity, such as replacing old equipment with state-of-the-art higher-capacity machinery. However, when dealing with innovative products and growing sales, managers say they are most worried by potential strain on the supply chain. Capacity planning and resource availability were also cited as concerns for companies entering new and emerging markets.
Talent issues are another significant concern for the respondents. Many of them noted that talent competition is intense for supply chain jobs, and even if the company has successful hiring cycles, executives are still concerned about retaining new hires and properly developing and utilizing their talent. Retention also is a challenge because the executives worry about how to best engage and motivate workers in the Millennial generation.
Complexity also weighs heavy on supply chain managers’ minds. In many instances, firms face situations where their products are becoming more complex and the amount of stock keeping units grows quickly. The most common cause cited by respondents is building different types of products while growing existing offerings. Common approaches to managing complexity, as cited by the survey participants, include greater standardization, simplifying processes and acting with speed.
Many executives also expressed growing concern regarding supply chain risks ranging from natural disasters to troubled suppliers, and the need for continuity planning. In particular, they are focused on the need to build business continuity considerations into new product development, how to decide when to invest in resiliency, and the additional challenges involved with continuity planning when lean operations are involved.
Next, although the executives mentioned a range of compliance components, primary compliance challenges include product regulation, trade controls and continually changing regulations. Mandates related to trade compliance, anti-dumping and customs, are being supplemented by mandates from regulatory bodies such as the U.S. Environmental Protection Agency, U.S. Food and Drug Administration and U.S. Department of Agriculture. As a result, compliance with these rules and regulations adds considerable complexity to the supply chain.
Finally, cost and purchasing issues are another topic for worry. Although price pressures are a concern in all industries, healthcare and pharmaceutical firms were noted as the industries that see the most impact. Restrictions instilled by the Affordable Care Act, as well as Medicare and Medicaid have altered these industries and will continue to do so in the future, the respondents note. To overcome cost and purchasing pressures, some executives say their organizations are focusing on improving efficiency.
What are your thoughts on the challenges most cited by the survey respondents? Are these the same concerns you worry about? Are there other supply chain concerns keeping you awake at night?