Executive Summary
The paper has focused on the supply chain and the challenges that may face some areas in the future. It is important to study such information as it prepares the industry to overcome the issues. For instance, financially, both the companies and governments of different countries will be ready to counter the problems that emerge. For example, the green supply chain management initiative that is targeted to protect the environment for the benefit of the people around the organizations. To achieve sustainability, one has to invest in sustainable practices. Once it is known that finances could become a challenge in the future, the parties involved will start preparing for it.
Apart from the area mentioned above, other areas the paper focuses on include the reverse channel, benchmarking, and the use of QR, ECR, lean and agile, and supply chain process control. The approach of this report was to gather as much information about the supply chain first and then narrow it down to the specific parts that relate to the topic. There are studies that have been done in the past and reviews of the research. The report has used much information from them to provide insights and answer a key question that disturbs many in the industry. Since the approach used to collect information can be described as exploratory as well, the paper provides a much rather deeper explanation of various concepts. By doing this, it becomes informative, especially to an individual who reads the report. This paper investigates and reports on the future challenges facing the global supply chain.
Introduction
While it is undeniable that supply chain logistics are ever-changing, it is right to state that 2020 due to the pandemic led to disruptions that the majority of brands are not accustomed to experiencing. Two years later, there are other challenges that have emerged and threaten to be worse in the future. This means that firms have to deal with them to ensure they remain successful within a competitive business environment (Yadav et al., 2020, p.120112). Those that were able to survive the 2020 volatility likely did that by getting lean, focusing on working capital, and selling via inventory. Manufacturers and suppliers from every part of the world have largely been tested, facing huge shortages in stocks, delays in fulfilments, and long backorders on common items. It is expected that the supply challenges will endure into the future, that is, even fifty years from now. This is especially on certain areas of the supply chain (Dutta et al., 2020, p.102067). These include the greening of the supply chain, the reverse channel, benchmarking, and the use of QR, ECR, lean and agile, and supply chain process control.
The Greening of the Supply Chain
Greening the supply chain is a term that has emerged to define and describe various actions that many companies are currently conducting to ensure better performance consistency and operational control over their extended supply chains. The initiatives are part of a procedure concerned with the implementation of a sustainable development plan that targets better health, environmental, and safety performance (Litke et al., 2019, p.5). It as well aims to increase efficiency in energy, water, or other raw materials usage, reduce the societal and environmental influence of business operations upon locals and the world biosphere. Lastly, it seeks to expand economic and life quality improving chances that are as a result of a company’s business activities.
The initiatives mentioned above have indicated positive outcomes for various organizations. However, this does not seem to be the case in the near future due to some problems facing their implementation (Turner et al., 2018). The issues stem from the hindrances that would prevent the industry from adopting the initiatives (Mayyas et al., 2019). They are divided into organizational, institutional, informational, and economic challenges. They can as well be categorized into internal and external challenges.
Internal challenges refer to those that happen internally within organizations or players in the industry themselves. The greatest would be financial constraints whereby there are two types of cost, including direct and transaction cost (Thorlakson et al., 2018, p.2072). Implementing the green supply chain might lead to an increase in profitability or economic performance (Pakdeechoho and Sukhotu, 2018). However, it involves greater operation costs, therefore, hindering the approach’s adoption in most firms (Sharma et al., 2020, p.444). This is particularly accurate for those that have restricted availability of resources. In addition to the fiscal problems, changing the culture and mindset of a firm and the players themselves can prove to be a great issue in its implementation.
Altering the core features and fundamentals of organizations such as goals, core technology, forms of authority, operational and marketing strategy is a challenging task. Leadership, as well as commitment from senior management in aligning the companies into a new direction, are critical. It is essential for the management to show support and enable environmental awareness among subordinates. Another issue that may face the industry while attempting to implement green supply chain management includes inadequacy of resources, that is, material, technical know-how, and technology. Lastly, a lack of control policies and regulations within companies may pose a great challenge in the future.
Apart from the internal challenges, there are external factors that may cause industry problems in the near future while implementing green supply chain management. Lacking the government’s support is among the top issues in this category. The development of proper standards, policies, and regulations encourages the sector players to adopt green initiatives. The fact that the latter involves much interaction with suppliers, managing suppliers, can be a problem for most firms. For instance, green purchasing needs a supplier to adhere to environmental requirements. Therefore, it is vital for them to be responsible as well as offer a strong statement of commitment to accomplishing GSCM.
The availability of green products in the market serves as a factor that obscures green supply chain management’s implementation. For instance, it is difficult to find a product in the construction industry that adheres to the green requirements, a situation that does not seem to change anytime soon. Only a portion of them can be described as green or capable of recycling, for example, timber and concrete. Nevertheless, using green items remains at an infant phase mainly due to the costs. Other challenges in this category include the lack of sufficient environmental measures such as sustainable auditing, training and development, and certifications.
Furthermore, some firms find it a problem to adopt green initiatives primarily due to the competitive as well as uncertain nature of the construction sector. Overall, the players in the industry are highly competitive amongst themselves in suggesting ideas for projects and in offering great performance. Knowing that such projects involve many uncertainties and unknowns, the probability of a delay, termination, or impact by economic circumstances is high.
The Reverse Channel
A reverse channel refers to a series of activities needed to retrieve a utilized product from a consumer and either reuse or dispose of it. For an increasing number of manufacturers, reverse supply chains have become an important part of business operations. In some instances, firms are forced to set up these chains due to environmental rules and regulations or pressures from customers (Kittipanya-Ngam and Tan, 2020, p.160). The European Union, for instance, starting in 2003, has required tire makers operating in the continent to plan for the recycling of a single utilized tire for each new one the business sells. The biggest issue in these logistics for omnichannel stems from complexity.
A retailer does not necessarily understand when an item goes back to the store, and while returns authorization procedures may exist, they may fail to find out concerning a return until it reaches the warehouse. This leads to a disadvantage, as most of them have not comprehended how to successfully balance omnichannel retail with reverse logistics management (Jarzębowski et al., 2020, p.4715). Furthermore, they need to learn what to do with items that have been returned. For instance, understanding whether they are resold as refurbished items or not, or if they go through liquidation, or if there is anything else that needs to be done. Reclaiming raw materials may be useful when there are recalled or damaged products. Nevertheless, other problems may arise too, including high-cost reverse logistics, poor visibility into products gotten, inability to understand the rationale of returns, and insufficient human resources to deal with returns.
Another significant challenge is establishing as well as tracking the worth of the unit. For example, a registration system for flexographic presses (Collart and Canales, 2022, p.220). A technician is dispatched to exchange a system at a client site. A new one might have a five thousand dollar-worth of value. The cost in forward logistics is a simple number (Collart and Canales, 2022, p.221). The question is what occurs when an engineer on the field swaps out the right assembly for the faulty one. They are now supposed to send the latter back to allow for repair. However, the one to be repaired does not possess full value.
Since it fails to work, it is thus not worth the five thousand dollars. It is important to note that it is neither worth $0 due to the company’s potential to alter a little sub-component and make it a helpful unit (Clauson et al., 2018). A computer program that handles these logistics has to consider the useable nature of the product and monitor the unit on a basis valued at less than full cost but more than the least cost. This is only a simple example of some interesting characteristics of a reverse operation that is not similar to forward logistics.
Benchmarking
Benchmarking is a metric that determines a company’s supply chain’s performance by taking into account quantity, time and value. It formulates a tangible measure of the efficiency of the key processes in the supply chain as well as serves to create a great basis for the performance of an organization. Apart from that, it aids in establishing the effect of every improvement made by a manager subject to appropriate measurement indicators (Chang et al., 2020, p. 2082). According to the various outcomes and purposes, it can be categorized into quantitative and qualitative.
On the one hand, in qualitative benchmarking, best practices of rivals or other companies as their data are used on successful methods for bettering supply chain performance. It assesses differences in approaches and practices to find suitable chances. On the other hand, quantitative benchmarking entails key performance indicators, estimation as well as analysis. Metrics such as revenue, inventory turnover, and profit are often utilized; nevertheless, any custom key performance indicator could work.
Quantitative benchmarking assesses the supply chain by not collecting information on practice but performance. Data is the other issue with benchmarking industrial operations. If every piece of data was easily available, using common definitions, in one location, and had a statistically relevant sample size, projects would always run well (Felix et al., 2019). This is not the only case, and it takes much hard work to reach there (Bressanelli et al., 2019, p.7397). For instance, if one is planning to do benchmarking on quality procedures of various plants in the United States and consistency lacks in the data gathering techniques, this may cause problems. In such cases, it becomes hard to effectively implement the process, even internally.
The Use of QR, ECR, Lean and Agile and Supply Chain Process Control
QR approach implementation is based on general value improvement of the supply chain. This is via partnerships and sharing of information, varying degrees of innovation, and communication, mainly reconfiguring as well as aligning the upstream activities and processes. Efficient Consumer Response refers to a joint trade and sector body aiming towards making the grocery industry as entirely more responsive to demand and promoting the elimination of unneeded costs from the chain. A lean supply chain seeks to reduce costs by producing significant volumes of products with less variability (Aich et al., 2019, p.140). An agile supply chain’s focus is on reacting to the demand in the market with smaller yet customizable items.
A supply chain process control means a collection of methods and tools that aid in characterizing variation patterns. By comprehending the latter, a company can establish the various sources and reduce them, thereby leading to a more consistent service or product (Agrawal and Narain, 2018). It is hard to remain current all the time with information about the industry and customer demands in the supply chain. As a result of lag time between the time of change of demand and its detection at different points on a supply chain, its impact is usually amplified. This, in turn, results in inventory excesses or shortages (Abbasi et al., 2018, p.8).
Organizations seem to overcompensate by speeding up or slowing down production, which can lead to fluctuation of inventory levels. In an attempt by firms to deliver to the consumer on time, they may face transportation costs in the future. For instance, currently, the price of petrol, diesel as well as gas has risen. Even though the companies will aim to satisfy their customers by a quick response approach, they cannot control the price change in the oil and gas industry.
Conclusion
There are aspects that have been introduced in the supply chain to ensure better performance that are threatened to fail in the near future, for example, the green supply chain management system initiatives. The paper suggests that these are part of a procedure concerned with implementing sustainable plans that target wellness, environmental, and safety performance. Many companies and sectors are focusing their efforts on sustainability. The supply chain business is doing that as well, only that it may fail if certain measures are not taken to prevent that. The main internal issue is the insufficiency of financial resources. To achieve complete sustainability, an organization needs enough money to cater to various issues.
It is, thus, important that the governments step in and offer financial support to the organizations as what they are trying to accomplish is going to be beneficial to many. For instance, reducing the amount of impact on the local surroundings of a company and the world at large. Additionally, natural resources such as water and raw materials are put to good use. Apart from green supply chain management, there are other areas that have been studied in the paper. These include the reverse channel, benchmarking, and the use of QR, ECR, lean and agile, and supply chain process control.
The paper has been clear that benchmarking is a metric that determines a company’s supply chain’s performance by taking into account quantity, time, and value. The metric can be categorized into quantitative and qualitative. On the one hand, there is qualitative benchmarking whereby research is done on the best practices of rivals as their data is used on successful methods for bettering supply chain performance. It assesses differences in approaches and practices to find suitable chances. On the other hand, quantitative benchmarking entails key performance indicators, estimation as well as analysis. Lastly, the paper shows an increasing number of manufacturers and the reverse supply chains becoming an important part of business operations. In some instances, firms are forced to set up these chains due to environmental rules and regulations or pressures from customers.
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