From geopolitical conflicts to single sourcing to labor shortages, every organization is vulnerable to supply chain disruptors. However, understanding the leading disruptors can protect manufacturers from supply chain threats and help to keep operations working like they should.
Every organization should take a proactive approach to supply chain disruption and have strategies in place to help tackle common challenges that may arise.
Supply chain disruptions can include anything that contributes to the inefficiencies of processes involved in the production and distribution of goods and components. Labor shortages, shortage of raw materials, natural disasters, geopolitical unrest, and a global pandemic like COVID are examples of supply chain disruptors that can slow down manufacturing and distribution.
Let’s take a closer look at some of the common supply chain disruptors organizations should be aware of in 2024.
1. Global Political Changes and Conflicts Affect Supply Chains
From the war in Ukraine disrupting major shipping lanes to Chinese manufacturing’s output dwindling to the Israel-Hamas war, companies are forced to reconsider their global supply chain choices. Global energy shortages, which can result from political conflicts, will likely also impact manufacturing capabilities, forcing some factories to operate at reduced capacity.
International conflicts have a profound impact on the ability to source and transport materials, products, and components. Limitations on air freight transportation across Europe and Asia spill over in northern European ports. In addition, disruptions in rail freight between China and Europe have affected the way retailers and equipment manufacturers can source and ship products to consumers.
2. Labor Shortages Can Disrupt Your Supply Chain
Labor shortages continue to affect supply chains, causing a lack of shipping crews, long-haul truckers, and last-mile delivery workers, among other challenges. This employee shortage affects more than just transportation and logistics.
Many types of organizations, from manufacturers to government agencies, are focusing on the need to close the skills gap as employees near retirement age. With employees aging out of the workforce, supply chains both international and domestic feel the pressure.
3. Rising Fuel and Energy Costs Present Supply Chain Challenges
The logistics industry is greatly affected by rising fuel and energy costs. Fuel costs affect the bottom line with regard to transportation, of course, but it also affects operating and maintenance costs. In turn, shipping rates rise for the supplier and the consumer which can affect timely delivery of raw materials and finished goods, ultimately affecting the overall cost structure of products.
Rising fuel and energy costs also impact consumer behavior, leading to changes in demand patterns. All of this affects the competitive landscape within the logistics industry. Maintaining lean inventory shelves with a minimum risk of stockouts can be accomplished with supply chain automation.
4. Supply Chains Can Be Affected By Higher Customer Expectations
When brick-and-mortar stores closed during the COVID pandemic, a huge surge of shoppers moved online and never went back—setting a new precedent for next-day delivery. Today, more shoppers want their orders to arrive within two days, along with free shipping. This has impacted the retail industry more than heavy industry, but manufacturers are feeling the pressure, as well.
Some companies have added more storage and fulfillment locations closer to their customers. While this is a temporary solution, the demand for warehouse space is high, which can make it more expensive and challenging to manage.
5. Supply Chain Bottlenecks Disrupt Delivery of Necessary Components
While the landscape has improved, suppliers continue to recover from the global pandemic, when there was huge consumer demand amid labor shortages and global uncertainty. Many of these logistic bottlenecks still exist. Shipping ports, in particular, continue to experience labor shortages, which leads to shipping and receiving delays around the world.
Long wait times on materials and manufacturing have led to broken supply chains with multiple moving parts. When one of those parts grinds to a halt, the entire supply chain is disrupted.
It’s safe to assume that the current supply chain disruptions will continue in 2024. Disruption in raw materials affects multiple industries. Inflation rates reduce consumer spending—impacting the demand for imported goods and slow sales of high-ticket inventory.
Manufacturers can strengthen their global supply chains by adopting new technology, implementing contingency measures, maintaining lean but well-managed inventory shelves, collaborating with other suppliers, and diversifying product sources.
Enter 2024 With a Strategic Supply Chain Strategy
Effectively managing complex manufacturing supply chains requires visibility, accuracy, and strategic decision making. Whether the disruption is a pandemic, a natural or man-made disaster, or the geopolitical landscape, when it comes to supply chain management the show must go on and only those who are equipped with a solid strategy and automation will survive.
Click here to read about the top 10 supply chain management tips that will help manufacturers prepare for 2024.
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