Supply chain shortages and staffing effects
Supply chains contribute to making processes easier and more efficient. However, they tend to be extremely vulnerable to any weakness in the chain, from a broken machine to a natural disaster. For instance, the COVID-19 pandemic completely started supply chain shortages everywhere. For this reason, you should consider temporary staffing services for your business.
In this article, you will learn everything you need to know about supply chain shortages and staffing effects. Therefore, it is fundamental that companies be proactive in mitigating the risk and being as prepared as possible. Additionally, supply chain disruptions are not often predictable; organizations must develop a solution to appease any issues during these times.
- What is the supply chain?
- Why is the supply chain so important?
- What are some of the vital elements of the supply chain?
- How does technology affect the supply chain?
- What is a supply chain shortage?
- What are the causes of supply chain shortage?
- How can EOR Middle East help you get more information about supply chain shortages and staffing effects?
1. What is the supply chain?
The supply chain is a well-known and used term within the modern commerce industry. It consists of means of distribution and a network of companies involved in the different processes and activities that produce value in the way a product reaches the final consumer. Therefore, the supply chain is one of the key elements in the logistics of any company. In addition, within it, management is the essential element for operational efficiency.
Companies with supply chain management must execute it correctly to ensure customer satisfaction. As a result, the company’s success depends largely on how they manage these processes. Its importance lies in the fact that it encompasses those activities associated with the movement of goods from the supply of raw materials. Hence, for a supply chain to be successful, it must have a planning, execution, and control project.
It is crucial to plan both demand and supply estimates, which, being flexible, require suppliers to be flexible as well.
To sum up, ensuring customer satisfaction is essential to generating more sales for a business. The more information the team has about the supply chain, whether theoretical or practical, the chances of leveraging the business grow exponentially.
1.1 Types of supply chain
There are four different types of supply chains, which are the most used in the market:
- Flexible model
- Agile model
- Efficient model
- Continuous replenishment
1.2 Flexible model
It provides the company the ability to meet peaks of high demand. Accurate stocking algorithms, part segmentation, and flexible planning are the three components that a supply chain must have to be considered flexible. In addition, it ensures diversifying suppliers and incorporating automation on factory floors.
For instance, staples’ paper and writing utensil products are produced and delivered via a flexible supply chain. In this manner, companies must guarantee that they have some stock, albeit less, of those products year-round. Therefore, they can achieve this through flexibility: having multiple suppliers, many of whom are on seasonal contracts. In addition, they perfect the stocking algorithm so that the company produces only what will be sold in the offseason.
1.3 Agile model
Process alignment, virtual integration a network base, and market sensitivity are the components of an agile supply chain model. Virtual integration enables the company to track market demand changes in real-time.
On the other hand, process alignment consists of sharing supply chain responsibilities across the business. This way, they can keep a co-managed inventory, using collaborative product design and running all parts of the supply chain in sync with each other.
Network-based is about an equal contribution by every actor in the supply chain. Finally, the market sensitivity component transforms the rate of production immediately with any changes in demand. This type of supply chain is a great fit for businesses that exist in markets with a high degree of demand variation.
1.4 Efficient model
This chain model is an ideal choice for businesses with highly competitive environments. They usually want to strive for high efficiency in their delivery logistics to retain a competitive advantage. Additionally, it promotes suitable inventory management and maximizes output from production equipment and labor.
Companies with tight competition and thin margins know that a lot of their profit will be found in reducing costs along the supply chain while ensuring vendors can keep their products in stock.
1.5 Continuous model
As its name indicates, it is a supply chain where there is a continuous, scheduled delivery of goods. Indeed, it ensures a steady cadence of products and resources. This type of supply chain only exists in environments with supply and demand stability. You can find them typically with mature supply chains for established brands and requires minimal variation in the customer demand profile.
2. Why is the supply chain so important?
As we mentioned before, the importance of the supply chain lies in its role that involves activities associated with the movement of goods from the supply of raw materials. Manufacturing and distribution to the end-user are also part of this process.
Likewise, the supply chain must be dynamic, since it implies a constant flow of information, demand signals, products, and funds between the different stages. Without it, products would not reach consumers. Hence, thanks to the supply chain, the entire product production, and distribution process work. In addition, it does it in a coordinated way to satisfy customer demand.
After the product is manufactured in different phases of production, it reaches the customer for consumption. In other words, what the consumers receive is the finished product, ready to be used to satisfy a specific need. That is why companies do it in a coordinated manner. Otherwise, the different goods cannot meet the existing demand at the next stage of the supply chain.
Because of the importance of the supply chain, it is essential that all companies carry out a supply chain assessment with the aim of optimizing its development.
3. What are some of the vital elements of the supply chain?
There are different elements of the supply chain that are vital for the whole process to work together:
- Transport and distribution
They are the people or companies that supply everything necessary to manufacture the final product or they can supply the final product as such. Suppliers are an essential element in the supply chain, so it is important to maintain a good relationship and keep delivery time agreements clear. Therefore, in some cases, choosing a good supplier can be a great challenge.
3.2 Transport and distribution
The transportation system is one of the most important elements in the supply chain since it involves the transportation of raw materials. This also includes both the transportation of the raw material and the shipment of the final product. In addition, its cost is directly related to the location where the merchandise is produced, such as the distance from the company to the place where the final consumer will receive the product.
Effective transportation management helps the company control the costs that this element implies for the business
The client is the main element within the supply chain since he or she is the one who receives and pays for the product. As a result, it contributes to the profitability of the business, and finally, it should be noted that everything that is done during this process is to satisfy the needs of the business.
Maintaining a constant flow of information makes all the difference in supply chain management. Consequently, reducing costs as well as on-time delivery to provide good customer service. Likewise, maintaining effective communication channels between each of the members of the supply chain will allow the entire process to flow and develop successfully.
To sum up, each element that comprises the supply chain is important from the obtaining of the raw material, the manufacture or production of the product, distribution, and delivery. Companies that work continually to improve their supply chain management are less likely to suffer business sustainability risks.
4. How does technology affect the supply chain?
As previously mentioned among the challenges supply chains must face are the reaction to unforeseen changes. For instance, sales channels, transportation, parts availability, taxes, currency changes, etc. Likewise, by investing in supply chain technology, companies are able to pick orders, bill, load, and deliver much more quickly and efficiently.
In a context in which supply chains must increase their capacity to respond to the new needs of consumers, remaining competitive in costs in a more complex environment. Therefore, the inclusion of new technologies and digitization have given many companies higher revenue and profitability increases of up to 10%.
As a result, currently, supply chains are adapting to these changes so that end consumers get what they need, when and where they want it. Thus, it becomes a challenge to better manage inventory and anticipate operational needs in real-time.
Therefore, modernizing procedures by leveraging data analytics and automation will be critical to helping supply chains. Consequently, to provide more detailed tracking of people, processes, and assets, as well as to generate more attractive and personalized experiences for customers.
5. What is a supply chain shortage?
Each of the parts that make up the supply chain has an important role in the ultimate success of a logistics company. However, sometimes there are problems due to lack of control or unforeseen events, which affect not only the logistics economy but also the image of the company. One of these problems is supply chain shortage, something more common than is believed, and with negative consequences for the entire business.
It is an event that takes place when a company cannot respond to a customer’s demand due to a lack of stock of the requested product. It usually happens when a specific sale is made and, when requesting the product from the warehouse, there is not the required quantity or it is not in the expected conditions.
When this happens, the company cannot make the sale properly. Therefore, there is a huge risk of losing a potential client while affecting the entire business in general.
6. What are the causes of supply chain shortage?
Among the main causes of this event are poor inventory management, disorganization in the warehouse, transport delays, and different staff failures. In addition, a delay in the receipt of new merchandise can have a great impact. Among the main consequences of supply chain shortage is the increase in logistics costs and the loss of one or more sales. Added to this is the possibility of offering a negative company image by not complying with what was planned.
6.1 How to avoid it
The organization in the warehouse and the existence of a constantly updated inventory are two of the key factors in the task of avoiding supply chain shortages. In the first case, the organization allows knowing exactly where the merchandise is, which avoids failures due to not finding a certain product at a certain time. Regarding the inventory, it is key that it is always updated since it directly affects the sales process.
In addition, good communication and permanent coordination between the different logistics areas and the work team are key to avoiding supply chain shortages.
7. How can EOR Middle East help you get more information about supply chain shortages and staffing effects?
Supply chain shortages can be a very broad topic. However, you do not need to worry. On EOR Middle East, we will provide you with the best options for supply chains and how you can avoid these issues. In addition, we offer services such as remote workers and contractors in many countries in the Middle East:
Would you like to contact EOR Middle East to obtain more information about the supply chain shortages? If you want us to support your business with our HR management expertise, you can call us at +971 43 316 688. Or send us an email at [email protected].
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