Many businesses that rely on supply chains for success understand that there is always the possibility that the supply chain and management of said supply chain could be the downfall of their current profits.
From the overall state of international supply chains to issues within internal management, a lot can go financially wrong.
If your business is experiencing a year-end slump, it may be time to step back, evaluate your supply chain, and determine if the piece of your puzzle is hurting your bottom line.
At GFS Logistics, we are a third-party logistics team that understands the total ins and outs of supply chain management. Here are some of our signs that your supply chain may be the problem and how a team like ours can help!
Your Suppliers Offer Inconsistent Service Levels
Inconsistent performance from suppliers can severely disrupt your supply chain operations. If suppliers frequently miss committed delivery dates or send subpar-quality products, it creates ripple effects down the supply chain.
When this happens, you may consistently face shortages of key components, preventing you from producing finished goods on schedule to meet customer demand.
Even worse, if suppliers send over defective parts, you may have to completely halt production and further dig into your bottom line.
Supplier delays and quality issues make it very difficult to plan output schedules and maintain just-in-time inventory levels. The unpredictability leads to higher safety stock and rush shipping costs.
The overall impact is lower efficiency, higher operating costs, inability to meet customer expectations, and strained relationships across the entire supply chain network. A lack of stability with suppliers has far-reaching consequences that manufacturers must proactively avoid.
Consistent Production Delays
When an unexpected production delay occurs, it can send ripples throughout the entire supply chain. Ultimately, if you experience consistent production delays, your customers (retailers) end up out of stock of those items, unable to meet consumer demand in a timely manner.
Aside from supplier inefficiencies, other types of delays like labor strikes, port congestions, damaged product batches, and acts of nature can be just as disruptive to your bottom line.
Above all of the noise, the common thread in production delays is lost output and the inability to transfer goods to the next links in the supply chain.
Each entity along the chain feels the financial effects through idle assets, missed sales revenue, and potential contractual penalties. They also risk permanently losing future sales and loyalty if customers turn to competitors due to stockouts. Production delays underscore the interconnectedness and interdependency of supply chain partners.
Expenses Always Sneak Up On You
Expenses are something you should always expect within your supply chain. However, if expenses continually sneak up on you and leave you strapped for cash, you may have some large problems within your total supply chain.
Transportation disruptions are some of the biggest expenses that can hurt your bottom line. Events like port strikes, trucker shortages, or severe weather can greatly increase freight and shipping costs. If products are delayed, expensive air freight may be required to meet deadlines.
If you keep running into these issues, a team like ours can use our warehouse management system software to find the right routes at the time you need it.
Fluctuating raw material costs can also sneak up on you without proper planning Prices of ingredients and industrial components can vary widely. Sudden price spikes for oil, grains, rare earth metals etc. leave supply chain managers scrambling to adjust.
If demand forecasts are too high and excess finished goods inventory must be disposed of or written off, it destroys profit margins. Facing this problem too often csn quickly lead to long term financial problems.
Managing these unexpected costs is an ongoing supply chain challenge. Building in operational buffers and flexibility is key to absorbing disruptions.
Get Your Supply Chain in Order With GFS Logistics
If you’ve realized your supply chain could be what’s holding your business back from success, it’s time to turn over a new leaf. This all starts with working with a partner like GFS Logistics that can spot your supply chain’s pain points.
From planning the quickest shipping routes to helping you get a grip on product demand forecasting, GFS Logistics is one of the nation’s leading logistics teams, helping suppliers keep their supply chain on top.
We’re ready to help you resolve your supply chain problems. Contact us today to learn more about becoming a member of the GFS family.
