3 Possible Causes of Supply Chain Problems

As a business, no matter your market, the supply chain is the essential lifeblood of your company. Any disruptions to your supply chain, such as a lack of raw materials or retail products, can have a devastating impact on your organization’s ability to function. Understanding the possible causes of supply chain problems is an important step in overcoming any disruptions and forms the basis of your risk planning and mitigation. Global shipping and supply chains are complex systems, and many things could go wrong, so here are a few common possible causes of supply chain issues.

Transportation Issues

The last mile of your supply chain can be the first cause for concern, as transportation issues can be devastating, particularly if you rely on modern retail supply chain logistics practices like Just in Time procurement. Transportation issues generally tend to be short-term but can take a while to resolve. If it’s a weather-related delay, this might only cause a delay for a week or so but theft of your cargo through piracy or damages caused in shipping can have a much bigger impact on your supply chain.

Consider problems like the recent blockage of the Suez Canal by another ship, which had grave knock-on effects for all other ships and transportation lasting weeks. Transportation issues are very difficult to mitigate completely, but you can increase your supply chain reliability by ensuring you do full and comprehensive assessments on all the cargo carriers you opt to use.

Natural Disasters

Natural disasters of any kind can have a drastic and cascading effect on the supply chain. A tsunami might disrupt production and cause factories to grind to a halt, it can impact the transportation of goods by road, and it can affect sea freight too. Natural disasters like volcanic eruptions, torrential rain, floods, fires, and even earthquakes can all have lasting impacts on supply chains. These effects can be both short-term, affecting shipping for a few days, or they can be long-term and require factories to rebuild. Diversifying your supply chain globally can help mitigate this risk.

Pricing Increases on Shipping

There’s not much you can do to stop prices from rising – it’s part of our global economy. Exchange rates, changes in interest rates, and fuel costs, among many other factors, can cause pricing to fluctuate greatly. Events like the COVID19 pandemic and the consequences it had on the cost of shipping skyrocketing are examples of how difficult it can be to prepare for these changes in the costs of shipping. To mitigate some of the effects of pricing increases on shipping, a company can lower the inventory it holds, or it can make clever use of exchange rates and future purchasing.

While knowing what the common supply chain issues are might not offer a solution on how to mitigate them, being aware of them and how they can impact you and for how long is. Having contingencies in place for your business for each of these causes can help prevent serious disruption to the profitability of your company.