{"id":23627,"date":"2024-05-31T12:02:29","date_gmt":"2024-05-31T09:02:29","guid":{"rendered":"https:\/\/fractory.com\/?p=23627"},"modified":"2024-12-19T15:31:36","modified_gmt":"2024-12-19T13:31:36","slug":"supply-chain-challenges","status":"publish","type":"post","link":"https:\/\/fractory.com\/supply-chain-challenges\/","title":{"rendered":"Top Supply Chain Challenges in 2024"},"content":{"rendered":"

As the global economy evolves, procurement and supply chain management faces unique challenges. 2024 is no exception, with various factors, such as geopolitical tensions, labour and raw material shortages, environmental concerns and technological advancements, shaping the landscape for global commerce.<\/span><\/p>\n

This article explores the key challenges of supply chain management that organisations face in 2024, providing insights into their implications and suggesting strategies for overcoming them.<\/span><\/p>\n

Global Trade Uncertainties<\/span><\/strong><\/h2>\n

One of the major challenges faced by supply chain managers is the cloud of uncertainty that hovers over global supply chains. In 2024, this volatility is rooted in traditional economic factors and further impaired by raw material shortages, unexpected delays, regulatory shifts and pandemic aftershocks. <\/span><\/p>\n

The clash of financial giants, the rise of protectionism, and the unpredictable nature of export-import regulations continue to cast a shadow over the stability of global supply chains and global commerce.<\/span><\/p>\n

In response to the ebb and flow of international relations, tariffs and sanctions are employed as strategic tools, which causes supply chain disruptions and inflating costs. Understanding the immediate and long-term implications of such measures and devising agile strategies to mitigate their impact is essential.<\/span><\/p>\n

Compliance with evolving trade regulations is an ever-evolving challenge. Supply chain professionals must understand trade laws comprehensively and adapt their processes and technology<\/a> to ensure compliance.<\/span><\/p>\n

Geopolitical Instability<\/span><\/strong><\/h2>\n

The United Nations <\/span>reported that in 2023<\/u><\/span><\/a> there were more violent conflicts globally since World War II<\/strong>. This led to <\/span>110 million people<\/u><\/span><\/a> being forced to leave their homes due to danger, fighting, or severe societal disruptions.<\/span><\/p>\n

The situation worldwide is concerning and causes problems in the moving and delivering of goods. In addition to already ongoing conflicts, experts are keeping a close eye on the tensions between China and Taiwan, because it could lead to significant challenges and economic uncertainties.<\/span><\/p>\n

New rules might make sending things like computer chips, farm products, drones and other technology out of these areas harder. If the situation worsens, industries that produce electronics, clothes, rubber and various metals<\/a> in that region might face serious difficulties.<\/span><\/p>\n

Sanctions imposed on Russia are stopping goods from being sent to and from Russia. In addition, Russia themselves have been blocking the transport of goods from Ukraine. These issues bring about serious supply chain challenges and increasing freight prices.<\/span><\/p>\n

Ocean Freight Bottlenecks<\/span><\/strong><\/h2>\n

Ocean freight bottlenecks are more than a momentary inconvenience<\/strong>; they are a symptom of more profound systemic challenges. These bottlenecks will continue to pinch global supply chains, slowing down the movement of goods.<\/span><\/p>\n

For Example, in 2021, the Suez Canal was blocked for six days, causing a massive traffic jam that stopped over 60,000 containers of products from reaching their destinations. This was a rare event, but experts suggest that similar sea traffic jams are bound to happen again<\/strong> in the future.<\/span><\/p>\n

These bottlenecks occur when too many ships try to move through the sea at once, leading to transportation delays and overcrowded ports. <\/span><\/p>\n

The shortage of containers, exacerbated by the demand surge post-pandemic, highlights the fragility of supply chain infrastructure. Developing strategies to secure the needed container volume at an acceptable price and time continues to frustrate supply chain managers.<\/span><\/p>\n

Leveraging technology, including advanced tracking and scheduling systems, can be the digital decongestant for ocean freight. Supply chain professionals are turning to technological solutions for traceability and predictability.<\/span><\/p>\n

Red Sea Crisis<\/span><\/h2>\n

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The Red Sea Crisis in 2024 has disrupted global supply chains, forcing ships to avoid the Suez Canal<\/strong> and detour around Africa. Iran-backed Houthi rebels have been attacking ships in the Red Sea since October 2023, demanding an end to the invasion of the Gaza Strip. This has increased shipping costs and altered trade routes<\/strong>, impacting international economies and ultimately leading to increased freight prices.<\/span><\/p>\n

Due to this supply chain crisis, the cost of shipping has gone up significantly. Some routes are longer and almost five times more expensive, severely affecting the trade path from Asia to Europe. These higher transportation costs<\/a> are carried over to the consumers and lead to accelerated inflation. The crisis has also made it necessary to move a huge amount of cargo, worth over <\/span>$80 billion<\/u><\/span><\/a>, through different trade routes.<\/span><\/p>\n

This also shows how easily global supply chains can be affected by political problems. Businesses must have a plan B ready for such unwelcome surprises.<\/span><\/p>\n

Global Port Congestion<\/span><\/strong><\/h2>\n

All around the world, big ships are stuck waiting at ports<\/strong>, creating traffic jams and leading to unexpected<\/span> delays in container shipping. Simply put, getting products and raw materials on time to their destination has become a major headache for supply chain specialists.<\/span><\/p>\n

The congestion and delays<\/a> seen at major global ports are reverberating throughout the supply chain, from raw material procurement to final delivery. Compounded by shortages of warehouse space<\/a>, these issues present formidable obstacles and supply chain disruptions to smooth operations.<\/span><\/p>\n

In the face of port congestion, last-mile delivery strategies are reopening. Innovations in urban logistics, such as micro-fulfilment centres and autonomous delivery vehicles, are being deployed to minimise the impact of upstream delays on critical customer deadlines.<\/span><\/p>\n

Labor Shortages and Workforce Management<\/span><\/strong><\/h2>\n

The trucking industry in Europe is facing major challenges because of a lack of drivers<\/strong>. About <\/span>17% of driving jobs are empty<\/u><\/span><\/a> and few young people want to become truck drivers \u2013 only <\/span>9% of them are under 30 years old<\/u><\/span><\/a>. With increasing customer demand, the need for drivers to deliver these goods is growing. This shortage is becoming a crisis, affecting existing supply chain operations of major businesses, and the situation doesn\u2019t seem to be improving any time soon.<\/span><\/p>\n

In fact, it\u2019s expected that the shortages will get twice as bad by 2028<\/strong>. Finding enough drivers who can work at the right time for appropriate pay continues to pose a significant challenge. Driving manager Jason Mueller from A1 Auto Transport<\/a> states: “With the shortage of drivers worldwide, there is a need for better work conditions for drivers. With no interest from the younger generation to become drivers, it’s paramount that the industry incentivises better work conditions so drivers are satisfied and the supply chain continues to work properly.”<\/span><\/p>\n

Strategic Sourcing Puzzles<\/span><\/strong><\/h2>\n

Strategic sourcing is about more than just finding the cheapest supplier. It’s a complex juggling act that weighs cost against rising risks, quality and reliability. It helps organisations to extract maximum value from their purchasing decisions and aligns their operational strategies with their purchasing strategy.<\/span><\/p>\n

In addition, strategic sourcing helps to reduce supply chain risks, secure the timely availability of raw materials, balance inventory levels, manage consumer demand efficiently, and run existing supply chain operations more effectively.<\/span><\/p>\n

In 2024, sourcing has become a complex puzzle, with many pieces that must be carefully fitted together for maximum benefit. To reduce those risks, having a clear and up-to-date supplier tiering strategy<\/a> can help manage these complexities more effectively.<\/span><\/p>\n

Environmental and Sustainability Pressures<\/span><\/strong><\/h2>\n

The green wave washing over global consumer trends has put sustainable procurement<\/a> at the forefront. Supply chains must align with heightened environmental consciousness<\/strong>, not only as a corporate social responsibility but as a business imperative.<\/span><\/p>\n

People are paying more attention to environmental, social and governance (ESG) issues, which are changing how goods are produced. Laws on unfair practices are getting tougher every day. Here’s a few examples of what’s happening:<\/span><\/p>\n