Report Highlights Supply Chain Issues

A new report highlights the issues facing supply chain executives.

The report, from APICS and Michigan State University, investigates the current business practices of more than 50 supply chain organizations and identifies critical issues. The paper is part of Supply Chain Management: Beyond the Horizon, a multi-year research project conducted by MSU’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.

For the report, supply chain executives were asked to assess both new opportunities they are evaluating and challenges they are facing. Specifically, they were asked “what keeps you awake at night?” Overwhelmingly, the respondents were concerned about:

1.Capacity and resource availability – Most individuals were concerned with a broad range of activities seeking to maximize the firm’s facility capacity, such as replacing old equipment with state-of-the-art higher-capacity machinery. Similarly, when dealing with innovative products and skyrocketing sales, managers were most worried by potential strain on the supply chain.

2.Talent – Many respondents noted that talent competition is intense for supply chain jobs. Even if firms have successful hiring cycles, they were still concerned about retaining new hires and properly developing and utilizing their talent.

3.Complexity – In many instances, firms face situations where their products are becoming more complex and the amount of stock keeping units (SKUs) is exploding. The most common cause included building different types of products while growing existing offerings. Common approaches to managing complexity included greater standardization, simplifying processes, and acting with speed.

4.Threats and challenges – Many executives expressed broad concerns regarding supply chain risks ranging from natural disasters to troubled suppliers and continuity planning. Respondents were 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.

5.Compliance – Primary compliance issues included 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 US Environmental Protection Agency, US Food and Drug Administration and US Department of Agriculture. As a result, compliance with these rules and regulations is adding vast complexity to the supply chain.

6.Cost and purchasing issues – Although price pressures hit virtually all types of industries, healthcare and pharmaceutical firms were noted as the top industries impacted. 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. To overcome cost and purchasing pressures, some executives cited efficiency as a primary focus area.