You are here

Other factors affecting supply chain management

24 February, 2015 - 17:30

In addition to managing the bullwhip effect, supply chain managers must also contend with a variety of factors that pose on-going challenges:

  • Increased demands from customers for better performance on cost, quality, delivery, and flexibility. Customers are better informed and have a broader array of options for how they conduct business. This puts added pressure on supply chain managers to continually improve performance.
  • Globalization imposes challenges such as greater geographic dispersion among supply chain members. Greater distances create longer lead times and higher transportation costs. Cultural differences, time zones, and exchange rates make communication and decision-making more difficult. Boeing and Airbus have discovered the downside of sourcing from global suppliers. Much smaller suppliers of kitchen galleys, lavatories, and passenger seats have been unable to fulfill orders from Boeing and Airbus, leaving the latter unable to deliver planes to its airline customers.
  • Government regulations, tariffs, and environmental rules provide challenges as well. For example, many countries require that products have a minimum percentage of local content. Being environmentally responsible by minimizing waste, properly disposing of dangerous chemicals, and using recyclable materials is rapidly becoming a requirement for doing business.