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5 Scary External Factors for Supply Chains

By LLamasoft Editorial Team  October 31, 2019

Meeting demand for fun-sized candies and trending costumes is only one grisly scenario supply chain professionals face. One thing Halloween can teach us is having the right inventory available at the start of the season is much better than empty shelves – yet no one wants too much leftover inventory on November 1st. 

Supply chains serve just about every person in the world. It’s a careful balancing act to ensure the right products are available at the right time, price and location. And while supply chain decisions can affect a massive population, few people understand just what goes into making them – and the role market, industry and external factors play in guiding businesses to the right answers about their product mix. Many of those factors, such as customer preferences, competition, weather and regulations, are outside of the enterprise’s control. It leads to some scary “what-if” scenarios. 

1. Technology Disruption

Artificial intelligencedrones and electric vehicles are some of the technologies causing massive disruptions within the supply chain industry. Although most of these technologies are intended to make our lives easier, more efficient and more sustainable – it takes time, talent and organizational realignment to implement new technologies across complex supply chains. Striking the balance of risk between adopting and not adopting new technologies is a constant, terrifying struggle. 

2. Talent Shortage

What makes this topic most scary is how much it resonates across the industry. Supply chain professionals are collectively dealing with a lack of data engineers, modelers and data scientists. Companies are trying to adapt by making education a part of professional development goals and fostering young talent in universities and even younger. Our biggest challenge could be convincing the future generation that math is cool… not scary!  

3. Unpredictable Demand

Inaccurate demand forecasting can result in shortages, overstocks and wasted capital. Precise demand predictions seem to require divination (or an AI-powered demand modeling tool). On top of market trends, product cannibalization and seasonality are some of the many factors that cause demand fluctuations. With the consumer expectations surrounding personalization and two-day delivery – one small error can hurt brand loyalty. Not to mention the complications a recession could cause for demand planning….  

4. Trade Wars

When reading the news, it does not take long to consider major ramifications of the political climate. Global supply chains are facing similar, yet entirely unique challenges as they relate to trade wars. Some of the many goods that are impacted by tariffs and trade wars include cell phones, medical instruments, pharmaceuticals, chemicals, wood, paper, plastic, glass and more. As if defining the cost-to-serve was not complicated enough, trade wars could cause a cascade of effects on operations, profits and consumer sentiments.  

5. Environmental Concerns

Scientists agree the environment is facing enormous challenges. As scary as this may be, supply chain professionals are in a unique position to have a massive positive impact as it relates to the reduction of CO2 emissions. Supply chain pros who are fearful of profit losses associated with sustainable efforts should be reminded that it doesn’t have to be a choice! Don’t lose sleep over this and put your worries to work by asking us about our sustainability solutions. 

What supply chain challenges are keeping you up at night? Let us know by commenting on our LinkedIn post!