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How Supply Problems May Affect Companies

How Supply Problems May Affect Companies

The supply chain is an important part in the operation of a business and companies having difficulties in the process often feel those issues. Supply chain is defined as the movement or sequence of materials as they flow from the original source up to the end or final costumer. Important activities usually characterize an active supply chain and these includes manufacturing, purchasing, transportation, customer service, supply planning and supply management. There is a need for companies to strictly adhere to the proper practices regarding their supply chain in order to avoid problems with the entire activities connected therein.

Despite the significant value and integrity of supply chains, it is really inevitable that supply problems will occur somewhere along the way. The problem could potentially get worse if the company fails to deal with this issue and does not exert an effort to proactively find and address the supply problems. Due to the nature of these problems, most companies will probably be put to test at some point and a if they do not truly understand the value of supply chain and fail to practice the right policies and protections this will lead to serious problems for the company, legal issues, and even imprisonment in some cases. Challenges and supply problems are not something that you can eradicate; they will always exist it’s important to realize that it doesn’t just affect your supply chain but also your entire operation.

Let’s consider a couple of examples. Taking the case of the Makers Mark, they decided to reduce the alcohol content in order to increase their supply and production to compensate for shortages in their supply chain. This action, to reduce alcohol content in each bottle allows for a small increase in production by spreading it out further.

Customers responded with complaints drawing the attention of company executives. Eventually Makers Mark realizes that the decision to alter their core product to adjust for supply chain problems was ultimately punishing the customers who had been loyal to them for years. They reversed their decision, returned to their original formula, publicly apologized and then made other corrections to compensate and increase production other ways.

Another recent example in the news is when Ikea meatballs were found to contain horse meat. Inspectors in Europe have found out that there are traces of horse meat from this signature food item. Ikea temporarily stopped selling and offering meatballs on some of its European outlets.  This was a supply chain problem that resulted in loss of business and loss of good will. To address the problem, Ikea had conducted their own inspection on the meatballs in order to show their concern and commitment to the safety and protection of their customers. Whether it was a gap in their planning or a lack of planning, the result was the same – supply chain problems that affected the company. The company has actively attacked the problem and is positive that they will be able to take the right decision and figure out how to implement alternative solutions regarding the Ikea horse meat scandal including a change the recipe of their meat balls.

You may not know how or when problems will strike your supply chain, but as you can see from these examples, how you react is of utmost important to the ongoing ability of the business to function, retain customers, and remain successful.

March 14, 2013
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BY Bellwether

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