Today’s inventory-based businesses are complex globalized systems which need to run like well-oiled machines to function properly. When these businesses are operating effectively, goods move quickly from suppliers to warehouses, consumers receive their products, and all aspects of service are smooth and cohesive. But because of how multi-faceted and interconnected these operations are, there are many opportunities for supply chain bottlenecks to occur, which can have cascading effects.
Supply chain bottlenecks can range in scope from mild disruptions to events with global impacts, due to the connected nature of the supply chain. Because of this, it’s crucial that inventory-based businesses take steps to eliminate these bottlenecks.
One way of doing so is with the help of comprehensive supply chain planning software, such as StockIQ, which gives decision-makers enhanced visibility into their operations. With tools that assist with things such as forecasting, analytics, and supplier tracking, inventory-based businesses can reduce and eliminate supply chain bottlenecks.
To understand how supply chain planning software such as StockIQ can remove bottlenecks, it’s important to first understand what they are and why they happen. Supply chain bottlenecks are some of the most pressing issues that inventory-based businesses face, and they refer to points in the supply chain where the flow of goods or resources is inhibited, leading to delays and/or disruptions.
Supply chain bottlenecks can occur at various points in the supply chain, from the raw materials suppliers to the point of delivery to customers. You can think of these disruptions as traffic jams which hinder the smooth flow of goods and services.
Supply chain bottlenecks can happen for any number of reasons. In 2021, there were more than 11,000 recorded supply chain disruptions around the world, while 57% of businesses say that supply chain disruptions significantly impact their revenue.
What are some of the potential causes of supply chain bottlenecks?
They can occur due to:
The impacts of supply chain bottlenecks often extend beyond the disruptive event itself. Firstly, a bottleneck event can be a one-off event, or it can be a continuous bottleneck, which causes an ongoing slowing or disruption.
There are a few potential impacts of supply chain bottlenecks:
Even singular supply chain events can have lasting impact. For example, in 2021, a ship blocked the Suez Canal (a major canal in the shipping industry) for six days, and a report found it resulted in “significant disruption in supply chains.” This report also found that this event “caused fluctuations in the supply chain, transport routes changed, transport distances increased, resulting in increased lead time and shipping costs.”
The globalized and interconnected nature of the supply chain means that bottlenecks often don’t just impact the one point of disruption. Instead, their effects can be far-reaching, and can have a cascading effect on various parts of the business.
While supply chain bottlenecks can be daunting, there are ways that businesses can reduce the risk of bottlenecks, and even eliminate them altogether in some cases. This can be done with the help of supply chain planning software such as StockIQ. StockIQ provides inventory-based businesses with maximum visibility over their operations, so leaders can make decisions which keep things running as smoothly as possible.
With that in mind, here are five (5) ways in which StockIQ can remove bottlenecks from inventory-based businesses.
StockIQ provides businesses with advanced demand forecasting tools, which can improve inventory management and supply chain operations, and reduce stock-related bottlenecks. These forecasting tools allow decision-makers to quickly understand what demand might look like, how demand might fluctuate, and what consumer habits might be like, so that the appropriate amount of stock is always on hand.
StockIQ’s sophisticated features include forecast hierarchies, which leaders can use to determine bottom up, top down, and middle out forecasts, in order to utilize the most accurate forecasting strategy possible. It also allows you to generate more accurate forecasts by informing the algorithm of special events (like promotions or disruptive events). StockIQ also monitors the performance of your forecast relative to your actuals, adjusting it on-the-fly, as necessary.
Replenishments can also be a source of bottlenecks, and delays or mistakes can lead to long lead times, poor timing, and the incorrect amount of inventory being stocked. But to properly mitigate bottlenecks in this area, these processes can be optimized with StockIQ.
StockIQ allows you to generate automatic orders, including an entire order schedule for every item you have, so you’re always ready to order. StockIQ can also automatically adjust for real world factors such as order cycle intervals, holidays, and order/delivery schedules for your suppliers.
Additionally, StockIQ can manage supplier minimums, and its Order Wizard will automatically help you reach a target such as units, weight, or minimums. StockIQ will also assist with inventory balancing by monitoring the state of inventory in your warehouses and will suggest group transfers to rebalance inventory.
Of course, inventory is the core of every inventory-based business, and because of this, it can be a source of severe bottlenecks. Stock outs can lead to frustrated customers and long lead times, excess stock can take up limited space and lock up financial resources, and improper inventory management can lead to long planning cycle times, which can trickle down to customers.
With StockIQ, you get a host of inventory management tools and analytics, so you can always ensure you have the right inventory on hand at the right time. For example, StockIQ’s Stock Out analysis gives you a clear picture of not only what is stocked out, but why that’s the case, so you can ensure it doesn’t happen again.
StockIQ also quickly identifies excess inventory and dead inventory, and uses an advanced inventory classing system, so you can define precisely which items to stock, how much, and where.
Suppliers can be another common source of supply chain bottlenecks. If supplier operations are delayed or mismanaged, then an inventory-based business will experience delays or issues getting inventory, which can then impact other parts of the business (such as customer satisfaction).
StockIQ has a supplier performance management module, which allows you to use lead times calculated from actual receipt history to determine if something is one time or if it’s late. StockIQ always has a lead time viewer, so you can see an order schedule for every item daily.
Additionally, StockIQ helps you easily track supplier performance, so you can determine which one’s suppliers are reliably on time, and which ones are consistently late. And when it comes to late orders, StockIQ will track all your open purchase orders, and will alert you if they’re late (or if they’re about to be) so you can intervene as early as possible.
A StockIQ strength is that it doesn’t just give you features, it provides you with answers, so you can solve problems as quickly as possible. This means that if a supply chain bottleneck is about to occur, you can take early actions to prevent it from happening. And if a bottleneck does occur, you’ll never be left in the dark as to why it happened, and you’ll be able to correct it in a timely manner.
For example, StockIQ’s data and insights will let you know what you’re going to sell, what you need to buy, and what hasn’t shipped/sold. You can also easily understand what your most important items are, how much you need, and if you’re meeting service level targets.
While supply chain bottlenecks are always a risk in this industry, it’s possible to reduce the impact of them, or eliminate certain instances altogether. For that, you need a comprehensive supply chain planning suite like StockIQ.
StockIQ has features which give you instant answers and insights into your operations, so you can keep things moving. You can optimize your processes, know why slowdowns are happening, and use intelligent data to stop them from happening again. If you want to find out how StockIQ can help you eliminate bottlenecks, contact us today.