Indentifying Supply Chain Bottlenecks

To fortify resilience, it is imperative to assess the entire supply chain and pinpoint potential bottlenecks that may hinder the desired outcomes. Addressing issues in one segment of the supply chain may prove futile if new obstacles emerge elsewhere. These bottlenecks often arise from: 

1. Unexpected areas or processes. 
2. Areas or processes were not deemed a priority. 
3. Areas or processes lacking visibility or insights. 

Given the dynamic nature of the market, the challenge lies in attaining comprehensive visibility across the entire supply chain to pre-emptively rectify minor issues before they escalate. 

Four Fundamental Causes of Logistics Bottlenecks 

Despite the diverse scenarios outlined earlier, most supply chain bottlenecks can be linked to four interconnected root causes: lack of visibility, internal processes, communication, and data. 

1. Lack of End-to-End Supply Chain Visibility: Data silos resulting from stakeholders using disparate communication methods hinder obtaining a holistic view of an order's status. Notifications from suppliers about shipment readiness might come after it leaves the factory, or departure delays may go unnoticed. 

2. Lack of Internal Processes: Well-documented and detailed internal processes are essential for making informed decisions, particularly when faced with complex situations that impact routing and pricing decisions. 

3. Lack of Centralized Communication and Documentation: Approximately 25% of customer shipments, as per Cogoport's internal data, are affected by late or missing paperwork. Tracking communication and documentation end-to-end streamlines processes, aiding collaborative efforts to enhance efficiency. 

4. Lack of Shipment Data: A general scarcity of data across the supply chain hampers accurate forecasts, real-time customer updates, and agile decision-making for rerouting and mode adjustments. 

Failure to Address These Root Causes Incurs Business Costs 

Neglecting these issues can result in substantial costs for businesses. For instance, a European retailer faced €600,000 in annual fines due to a lack of visibility into stock and container locations. Additionally: 

• Inaccurate forecasts lead to stockouts and potential customer loss to competitors. 
• Disorganized internal processes cause inefficient decision-making and delays. 
• Missed paperwork deadlines result in shipments stuck in port, accruing excess costs. 
• Uneven data access leads to team confusion and outdated information. 
• Lack of knowledge about container contents and arrival times increases the risk of stockouts. 

Mitigating one cause can often alleviate others, emphasizing the importance of full end-to-end data visibility. A holistic approach to the supply chain empowers data-driven decisions based on accurate, real-time information. 

Addressing Root Causes of Supply Chain Bottlenecks 

In dealing with logistics bottlenecks, short- and long-term solutions exist. Incorporating digital technologies into the supply chain has the potential to swiftly enhance service levels, simultaneously reducing costs by as much as 30%. Key considerations include: 

4. Empowering teams with accurate, real-time information for faster internal decision-making. 
5. Revamping internal processes and establishing clear escalation processes. 
6. Assessing the internal data structure to ensure swift responses to potential roadblocks. 
7. Centralizing communication across all stakeholders and teams to enhance collaboration and streamline processes.