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What new challenges does the supply chain face?

The supply chain plays an essential role in the daily activities of millions of people and companies. We only have to remember the problems that have been generated by the lack of an essential component for manufacturing, such as microchips, when maritime transport costs quadrupled (which fortunately has now stabilized), or by the lack of raw materials such as minerals, to give just a few examples. Any incident at origin or during manufacturing is transmitted to the rest of the supply chain and ends up translating into an inability to meet demand and/or an excessive increase in the price of the final product.

In addition, technological, economic, environmental and regulatory changes have given and will continue to give rise to new challenges, or transform existing ones. What are the most relevant challenges currently facing the supply chain, and how are companies working to adapt?

1. Adapting to constant technological change

This challenge is not new, but it has become a constant for the supply chain. Technology has changed the way consumers understand online shopping, and the demand for automation to streamline orders is growing. Moreover, artificial intelligence (AI) and data analytics have transformed the way product flows are managed, among other things. Robotics, IoT or machine learning are technologies that companies can no longer ignore for long.

But while technology offers increasingly flexible and efficient solutions, it often also requires investment in both the technology itself and in training staff to use it. The key to meeting this challenge is to carefully select the technologies we implement, to do so in a phased manner, and to invest in trained personnel who can get the most out of them.

2. Adapting to trends in consumer demand

End-consumer behavior has a clear impact on the entire supply chain, from the type of product they buy or stop buying, to expectations in delivery times and traceability information.

This forces everyone in the chain to keep abreast of changes in demand trends in order to adapt quickly to market fluctuations and avoid, for example, unnecessary stock build-up or stock-outs. Faced with this challenge, we can only try to keep abreast of consumption trends and analyze order history on a regular basis to detect seasonality or unusual peaks. Having an up-to-date and complete WMS will greatly facilitate this last task.

3. Sustainability is here to stay

Consumers and government regulations are driving increasingly sustainable practices, and are concerned about all points in the supply chain, from sourcing raw materials, to transportation-prioritizing local products-and packaging, as we have seen with trends in green logistics.

Therefore, companies are challenged to implement sustainable and responsible practices that reduce their carbon footprint, minimize the waste they generate and, in general, promote ethical and circular economy practices throughout their supply chain. In fact, more and more companies are getting involved not only in their own actions, but also in analyzing and assessing this type of practices in their suppliers.

But, in addition to implementing this type of sustainable actions, it is essential that companies communicate it in all their channels, especially in digital ones, as it is information that more and more companies and users want to know.

4. Increasing global complexity increases disruption

The global interconnectedness of supply chains has also posed major challenges in recent years, as many companies that depended on a single route for the arrival of raw materials or distribution have found. We are talking not only about transport saturation or price increases, or the lack of a component or raw material, but also about pandemics, natural disasters or geopolitical problems.

Faced with these supply chain disruptions, many companies have seen their production capacity and ability to meet demand seriously affected. To try to mitigate the effects of these unforeseen events, one of the best options is to opt for supplier diversification strategies, better stock and inventory control, to avoid excessive dependence on a single supplier or country of origin.

5. Lack of talent and specific skills

The fast and increasing digitization of the supply chain has also resulted in a lack of qualified personnel, especially for positions related to certain technologies, data analysis or risk management. This hinders the implementation of technologies that are otherwise increasingly necessary, or their proper management and efficient utilization.

Many companies choose to invest in training internal personnel, who already know the company and its processes, instead of looking for professionals who are otherwise scarce and also require a period of adaptation and knowledge of the company.

In short, the supply chain is constantly evolving. The challenges change, but there will always be challenges that will require adaptation by the different companies involved in order to remain competitive, resilient and efficient. Therefore, having partners who, in addition to offering advanced technological solutions, are part of our team and accompany us throughout our journey, will be one of the keys to the future of the supply chain.

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