Sep 14, 2023

When looking at its basic definition, the supply chain is an interconnected network of processes that allows businesses to deliver products and services to their customers. However, any decision-maker would say there is much more to the process than getting a shipment from the production line to the checkout lane. A single stock item passes through multiple touchpoints before reaching the end customer, which is why one blind spot in the supply chain can have costly repercussions. Nevertheless, an estimated 56% of large-scale retailers admit to struggling in maintaining inventory visibility. However, the lack of stock control is only the tip of the iceberg.

Experts suggest there are several visibility bottlenecks that can occur in the supply chain, many going by unnoticed as businesses strike to maximize accurate throughput. Unfortunately, one error, such as a failed compliance code or incorrect shipping address can negatively impact the entire system. While every business is inherently unique, the following five bottlenecks have commonly plagued most companies, which is why it’s important to recognize their effects and remediate them before they harm your bottom line.

1. Lagging Inventory Updates

Inventory management is one of the most common bottlenecks in the supply chain. It occurs when businesses fail to keep track of their inventory levels and end up with either too much or too little stock. Overstocking has cost businesses $123.4 billion in past years while stockouts can cost 4.1% of a retailer’s yearly revenue. Having too much inventory ties up capital and leads to increased storage costs, while having too little stock can result in stockouts and lost sales.

Overcoming stocking bottlenecks requires faster stock updates. As a result, businesses should consider implementing a digital inventory management system (IMS) that tracks inventory levels in real-time and provides alerts when stocks reach critical levels. A standard IMS shared between distributors and shipping teams can also ensure the correct SKUs are tracked and displayed on customer-facing applications such as e-commerce sites. A robust IMS paired with automated data capture can also connect to your WMS to help administrators predict demand and plan their inventory accordingly.

2. Communication Breakdowns During Transportation

Transportation is another bottleneck in the supply chain, as it can be affected by factors such as weather, traffic, and delays at ports. More recently, the T&L has also been navigating through multiple labor disruptions and strikes, emphasizing the dependency businesses have on their transportation systems. Although contingency plans can help mitigate impact, supply chains often feel the strain of preparing for transportation disruptions before strikes ever happen. Signs of potential disruptions may include:

• Increase stocking costs
• Longer estimated fulfillment times
• Missed shipping deadlines

By leveraging multiple transportation modes, such as air, sea, and road, distributors can have a backup plan in case of delays or disruptions. Micro-fulfillment centers and urban warehouses are also becoming more prominent as a way to curb transportation costs and communication breakdowns. By diversifying transportation options, businesses can minimize unforeseen downtime while preparing for new challenges and opportunities.

3. Initial Supplier Procurement

Procurement is the process of acquiring goods and services from external sources. It is a critical component of the supply chain, as it can impact the quality, cost, and availability of goods. Long wait times during supplier procurement directly impacts the availability, cost, and quality of goods. Furthermore, when supplier profiles are not managed correctly, it can lead to material shortages, halting production within the manufacturing plant. Therefore, it is important to have a well-structured procurement process that ensures effective management of suppliers to achieve a seamless supply chain.

To accurately outline supplier relationships, businesses should adopt a strategic approach to procurement that involves identifying and evaluating potential suppliers, negotiating contracts, and monitoring supplier performance. Digitized profile monitoring is one way to track supplier compliance and received materials. Additionally, businesses should establish clear communication channels with their suppliers and work collaboratively to resolve any issues that arise.

4. Manual Quality Checks

When converting raw materials into finished products, multiple quality checks are in place to verify the correct materials are used. It is a critical component of the supply chain, as it determines the speed and efficiency with which businesses can deliver products to their customers. However, manual quality checks become a bottleneck during spikes in demand as more products must be verified before leaving the loading dock. 2022 broke the record for most recalled inventory per year with over 1 billion units recalled, showcasing the pressing need for dependable quality checks.

Since manual processes often come with a high degree of errors, businesses are investing in automated quality check technology such as automated data capture and machine vision. Providing a balance between innovation and affordability, voice-based checklist systems can also help reduce manual touchpoints while requiring workers to audibly confirm quality checks before clearing inventory for shipping.

5. Updating Storage Space Under New Capacity Levels

Capacity refers to the ability of businesses to meet demand for their products and services. It is a critical component of the supply chain, as it determines the level of customer satisfaction and loyalty. However, capacity can also be a bottleneck if businesses fail to anticipate and plan for changes in demand. Moreover, as warehouses deal with 30% return rates, businesses may struggle to separate returned/used goods from the rest of the supply chain without potentially mixing inventory or losing stock.

To best accommodate returned goods into your storage areas, consider optimizing reverse logistics with solutions that allow them to scale their operations up or down as needed. Automation solutions should strive to monitor demand trends and adjust their capacity planning accordingly.

Relieve Bottlenecks with a Dedicated Solution Designer

In today's fast-paced business landscape, companies must navigate a complex web of supply chain procedures to ensure timely and efficient delivery of their goods and services. From sourcing raw materials to transporting finished products to the end user, the supply chain encounters a myriad of obstacles that can negatively impact the entire process. These challenges include anything from transportation delays to inventory management issues to quality control problems.

To overcome these obstacles and optimize their supply chain, companies must first identify the specific challenges they face and then implement effective solutions. When working alongside a solution provider, businesses can create a scalable solution with innovative technologies that improve communication and collaboration with suppliers and partners, streamlining processes to increase efficiency and reduce waste. Take the first step towards maximizing visibility when you evaluate your current workflows with Heartland. By establishing clear visibility goals, companies improve customer satisfaction, increase profitability, and gain a competitive edge in their respective markets.