Factors affecting the supply chain in 2022

What you should know about the changing world of international sourcing.

Reading Time: 4 min

During the pandemic, shortages of all types of products and problems with on-time deliveries, from raw materials, food, electronic components, automotive parts, to toys, reached historic levels. Shipping rates rose to record highs, and consumers faced delays and price increases. By mid-2020, there was widespread hope that things would soon return to normal. It emerged the idea that relatively soon the global economy would come back to life, and problems created by its temporary suspension, caused by the pandemic, would be solved relatively quickly. However, reality shows that the resolution of the world's supply chain problems seems even further away than when they began. Around the world, nations are challenged by a number of supply chain problems. Tensions in coordination between global trade channels, manufacturing hubs, logistics networks and environmental issues are some of the factors affecting this field. It will be critical how companies and policymakers resolve these challenges that now impact economic growth and directly affect businesses and the world's population.

Take into account the factors that affect the supply chain: The first step to success.

A supply chain is made up of several processes which try to satisfy needs. Some of the elements involved in these processes are the suppliers, the production area, warehouses, distribution and logistics channels, wholesalers, retailers and the final consumer.

All this set, called supply chain, develops an endless number of activities and other matters that are not so easy to manage or control. The effectiveness of a supply chain is sometimes affected by external and internal factors and it is necessary to evaluate and control these factors.

"...There are service providers based on digital technology tools that offer companies the option to successfully manage these global factors that affect the supply chain and help to minimize risks."

How to control external factors. A difficult issue

Companies must be sure to take into account the external context when creating purchasing strategies to stay ahead of potential risks, however, controlling these factors is not an easy issue. The financial environment, political changes, technological advances, socio-cultural movements and environmental fluctuations are some of these external factors that are difficult to predict and manage efficiently.

In this regard, supplier management enables companies to create a supply chain of pre-qualified specialists and monitor their exposure to threats. This enables purchasing departments to act and adapt to the external context more effectively. Today, there are service providers based on digital technology tools that offer companies the option to successfully manage these global factors that affect the supply chain and help to minimize risks.

Internal factors affecting the supply chain

First of all, a factor that limits the achievement of a successful supply chain is the lack of information for better control. Often, the company does not have enough information on each of the links of its supply chain, which makes it difficult and leads to poorly decisions that result in problems in production processes. Another important factor for a successful supply chain is the market definition. If there is no market segmentation, the company will not know what its customers need and it may offer solutions, products, or services that are of no value to the customer. Segmenting supply chains, by customer needs, will help in all processes and flows, as it allows for higher inventory turnover and fewer monetary losses.

"...Segmenting supply chains, by customer needs, will help in all processes and flows, as it allows for higher inventory turnover and fewer monetary losses."

Another key factor that currently reduces the effectiveness in the supply chain is the avoidance of the use of technology and the new ways of specialized digital technology services. The lack of resources to acquire new technologies, the resistance to change to opt for new technological tools, prevent the facilitation and streamlining of processes within any company. In this sense, it is not always necessary to invest in expensive tools. The best thing to do is to make an analysis of which technological tool or service covers most of the needs of the supply chain, and thus be able to make a good investment in it. The more problems are solved with a single tool, the greater the return on investment for the company.

On the other hand, aligned and integrated strategies throughout the supply chain are a very important factor. Sometimes the people in charge of managing processes in supply chains do not have the experience, knowledge, information and technological updating required to manage an effective supply chain, which leads to poor project development and implementation, especially in the current global situation. However, today there are companies that specialize in this area, which facilitate the steps to achieve the development of a successful supply chain. Finally, a factor of great relevance is the adjustment to the requirements of social and environmental impact standards required worldwide, which can become a headache when it comes to paying taxes, tariffs or fines. This factor implies the importance of knowing which companies comply with the appropriate sustainability parameters.

"The best thing to do is to make an analysis of which technological tool or service covers most of the needs of the supply chain, and thus be able to make a good investment in it."

The solution. New digital tools

A digital platform emerged on the market to help thousands of companies around the world to embrace more sustainable business practices while boosting their procurement agility and growth.

Tradalink takes care of finding the best possible suppliers, gathering and comparing their offers. Tradalink delivers the best buying experience to companies without sacrificing social and environmental impact.