2023’s Top Supply Chain Challenges Extend to 2024: Gaps in Visibility Pose Obstacles for Global Supply Chains
Businesses with international supply chains faced a multitude of challenges in 2023, primarily from rising costs, fluctuations in demand, and shifting geopolitical tensions. These challenges are likely to persist in 2024 and highlight the need for supply chain visibility, an important factor in avoiding these disruptions.
Top Challenges for Supply Chains in 2024
A recent QIMA survey of over 800 businesses with international supply chains revealed that the top supply chain challenges of 2023 stemmed from:
Rising costs: Inflation is an ongoing issue worldwide, with rising prices causing companies to reevaluate their budgets.
Fluctuations in demand: As inflation increases and working capital decreases, consumers are purchasing less. This significantly impacts the ability of companies to predict their sales and subsequently leads to overproduction or product scarcities.
Geopolitical political tensions: Geopolitical tensions are on the rise worldwide, leading to trade disputes and shifting economic activity that disrupt global supply chains, especially for businesses sourcing from overseas suppliers.
These challenges are expected to persist in 2024, as disruptions from political tensions and rising costs continue to increase. These challenges are fueled by the continued roll-out of environmental, social, and governance (ESG) legislation, which puts added pressure on companies to meet compliance standards, and may lead to punitive fees and reduced brand reputation.
To prepare for these challenges, many supply chain managers are increasing supply chain visibility.
Visibility Gaps Pose Risks to Global Supply Chains
Supply chain visibility is a critical tool in strengthening global supply chain operations, giving businesses valuable insights into the inner workings of their network and enabling real-time operations monitoring. This can be a crucial step in mitigating risks from geopolitical tensions and fluctuating costs, as supply chain managers can monitor their suppliers and create risk strategies to prepare for changes in their network.
Despite these advantages, a survey conducted by QIMA revealed that only 16% of businesses have comprehensive knowledge of their suppliers across all tiers, and nearly a third of respondents reported knowing less than 50% of their supply chain.
Visibility gaps also pose risks for achieving ESG compliance, making it difficult for brands to ensure their entire supply chain adheres to expected standards. Additionally, a lack of supply chain visibility can lead to inconsistent product quality, which can be a persistent issue in a diverse supply chain.
Learn more about how to enhance your company’s visibility and avoid disruptions in global networks through supply chain mapping: How to Map a Supply Chain: Tools and Techniques
As we move into 2024, addressing visibility gaps will be a major step for businesses seeking to avoid the challenges of the global market. As rising costs and geopolitical tensions complicate the supply chain landscape, visibility will enable businesses to fully assess and address challenges in their network.
Read the full report: Q1 2024 Barometer
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