No supply chain is perfect. Invoicing errors, purchasing order mistakes, varying compliance issues, and even language barriers can cause costly supply chain bottlenecks. Even real-time visibility and predictive forecasting can’t fully prevent potential delays, especially with logistics operations that span the globe.
True perfection might be unattainable, but that doesn’t mean companies should stop striving for it. Identifying the most common supply chain bottlenecks is the first step toward preventing expensive—and often avoidable—inefficiencies from dragging the supply chain down. Without addressing these issues, they can quickly spiral out of control.
With that in mind, here are some of the most common supply chain bottlenecks—and how to avoid them.
Freight invoice exceptions can cause significant, even systemic supply chain delays and inefficiencies. That’s because invoice exceptions demand additional time and energy to process manually—meaning lost time, hidden costs, and lack of scale. Worse, when invoice exceptions become part of the normal operating procedure, supply chain efficiency consistently gets worse.
Preventing invoice exception bottlenecks can be a challenge, since they can occur for something as simple as a PO approver being out of the office or even tied up with other tasks. But there is a solution.
Automating invoicing can help prevent unnecessary invoice exceptions and streamline resolution. Essentially, this works by establishing clear parameters—including dollar limits—around what should trigger an “exception” in the company’s transportation management system (TMS). When the system does flag an exception, it is then automatically routed to the appropriate person to handle the query.
Automating a large portion of these invoice events can drastically reduce the number of manual invoice exceptions clogging the supply chain. Outsourced freight audit and payment (FAP) services can further streamline exception management by taking the burden of modifying, rejecting, or approving exceptions off the shoulders of overburdened staff.
Incorrect purchase orders (POs)
Purchase order errors and subsequent delays aren’t as common as invoice exceptions. But their existence is doubly troubling, because PO compliance is such a preventable supply chain bottleneck.
Luckily, one of the best ways to reduce the amount of time wasted on POs is also one of the most straightforward: simply establishing clear compliance standards and visibility of PO statistics for internal departments and external suppliers.
Increased visibility encourages accountability for POs. It also makes it easier to diagnose where the most frequent purchase order errors occur. Establish purchase order best practices and track PO compliance statistics, and this problem can (mostly) disappear.
Global supply chains frequently face bottlenecks at international borders, regardless of the mode of shipping. It’s inescapable—and as a result of recent political events, these bottlenecks may only get worse. In Europe, for example, supply chain disruptions as a result of Brexit could reduce manufacturers’ profits by 30%.
Tax and labor laws can cause significant delays when supply chains straddle border crossings. Complex customs paperwork and literal shipping bottlenecks—like delayed trucks sitting at the border—can add significant friction and costly delays to any international supply chain.
The best way to avoid international border crossing delays is by using real-time shipping data. Delays happen—but adding to that delay with sluggish communication further down the supply chain only causes a cascade of unnecessary problems.
Knowledge is power. When supply chain managers have up-to-date shipping information—including details about any delays—they can take the appropriate steps to alleviate the disruption on the rest of the supply chain.
The weakest link
A supply chain is only as effective as its least efficient component. A single supply chain bottleneck can drag down hundreds of otherwise optimized systems, causing waste in multiple departments and cutting into the bottom line. Recognizing the most common constraints can increase supply chain throughput—and boost profits and efficiency across the board.
There’s no such thing as a truly minor supply chain bottleneck. Even the smallest snag has the potential to drag a global operation to its knees. To banish your bottlenecks and keep every link in your supply chain as strong as the last, get in touch today.