The manufacturing industry faces many challenges, such as a skilled labor shortage, supply chain instability, and inventory management issues. But with every challenge, there is an opportunity to innovate and grow.
GlobalTranz works with manufacturing shippers every day to move their goods and streamline their logistics strategies. Here are the challenges we’re seeing across the industry, and what they mean for your supply chain and your shipping processes
5 Challenges Facing Supply Chain Managers in Manufacturing
1. Supply Chain Uncertainties and Changes Tied to the Pandemic
Since the start of the COVID-19 pandemic, the global supply chain has faced constant changes and uncertainties across every industry. And manufacturers have been some of the hardest hit. There have been fluctuations in demand that have made forecasting feel impossible. Employee safety measures must now also include COVID-19 protocols in addition to preventing accidental injuries. And moving materials and products was made difficult, especially at the start of the pandemic, due to closed borders, limited air freight, and driver shortages.
Now, two years into the pandemic, it is still an ongoing challenge for manufacturers. In fact, many of the challenges we’ll talk about below are in some way connected to the pandemic. But one major lesson manufacturers have learned is the need for contingency plans and flexibility. In an ever-changing landscape, the ability to be flexible and adjust your strategy as needed is what makes a manufacturer successful.
And when it comes to transportation, find a partner who can help you traverse the evolving pandemic. GlobalTranz can be that partner—helping you make sense of changing pandemic restrictions, protocols, and best practices for all things logistics.
2. Supply Chain Management and Maintaining Inventory
Facing inventory challenges is common in the manufacturing industry. And today, supply chain instability is an ongoing concern, including when it comes to logistics and warehouse management. It’s difficult for manufacturers to stay organized and calm in the midst of chaos.
To help level out this instability, 41 percent of executives plan to add or diversify suppliers in existing markets, according to Deloitte’s 2022 Manufacturing Industry Outlook. There is also a trend toward localizing networks in an effort to reduce offshoring and simplify supply chains.
With demand forecasting becoming more difficult since the start of the pandemic and many businesses left with a shortage of products, many companies are starting to move from just-in-time to just-in-case inventory management. Meaning, instead of opting to minimize excess inventory by only ordering what they would need to meet expected orders, they are ordering more additional inventory to avoid shortages. This is putting pressure on manufacturers to overproduce to meet the new demand.
Inventory management software is an important solution. To help maintain the right inventory levels, manufacturers can use real-time tracking throughout the whole production process. Through serialized barcodes, it’s possible to see the location and quantity of goods. The tracking software can provide precise updates of raw materials as well as work-in-progress and finished products.
But inventory management is just a piece of the supply chain puzzle. It’s important that your inventory management software can easily integrate with your transportation management software. When you work with GlobalTranz, you tap into our technology that can help enhance productivity, visibility, and fulfillment—while seamlessly integrating with your inventory management software to give you full control over your entire supply chain.
3. Skilled Labor Shortage
One of the biggest manufacturing challenges faced by the industry today is the lack of skilled workers. According to U.S. manufacturers surveyed by The Manufacturing Institute and Deloitte Consulting LLP, it is now 36 percent more difficult to find the right talent than it was in 2018, despite a higher unemployment rate. And in the current environment, approximately 2.1 million jobs could be left unfilled by 2030 due to the manufacturing skills gap.
The combination of an aging workforce and growing population has led to this difficulty. To overcome this challenge, there are a few options manufacturers could consider – including:
- Programs to develop your lower-skilled employees into more valuable workers
- Communication and planning ideas aimed at keeping some of your older highly skilled employees around past the date they might otherwise choose to retire
- Partnerships with community colleges and other educational institutions that can make entry-level hiring less risky, increase early-months productivity of workers, and provide resources available for companies interested in apprenticeship programs
The skilled labor shortage also applies to truck drivers, causing issues for transportation. At the end of 2021, the American Trucking Association found that the trucking industry is short 80,000 drivers, and without action, the shortage will double by 2030. This ongoing issue gives rise to rate volatility and capacity issues.
Though the driver shortage is an ongoing challenge that requires industry-wide effort to solve, you can get stability when you tap into GlobalTranz’s network of 50,000 truckload carriers and 120 less-than-truckload carriers.
4. Embracing New Technology
Innovations in technology will go a long way in helping manufacturers handle challenges like increased consumer demand and the skilled labor shortage. It can be challenging to make the changes that are often necessary to implement new technology. But doing so can ease inefficiencies related to warehouse and inventory management, as well as logistics management.
Manufacturers are under more pressure than ever to fulfill large orders and deliver the goods. They need to in order to stay relevant, innovative, and competitive. One challenge for technology is how best to implement the Internet of Things (IoT) to achieve operational goals such as reducing costs, improving efficiency, increasing safety, supporting compliance, and pushing product innovation. It’s not enough to simply implement the technology into their products and service — there needs to be a strategy. Systems need to be in place to collect, analyze and translate this data. If no clear strategy is set, manufacturers will not be able to improve their decision making in a way that is beneficial.
And technology has also come a long way for logistics. Investing in an end-to-end transportation management system is critical. The visibility you will gain from tracking capabilities and real-time freight analytics will allow you to gain control of your shipping costs and operations. Technology is one answer to many of the challenges we’ve discussed here, but taking the step to actually implement technology is a challenge in itself. The right partner not only has best-in-class technology, but the expertise and processes in place to make managing the change seamless.
5. Reducing Transportation Costs
Increased demand, labor shortages, rising fuel costs, and overall supply chain volatility have all lead to increased transportation costs. Many supply chain leaders, including those in manufacturing, are looking for ways to reduce their transportation costs.
Investing in a third-party logistics partner can help you reduce your excess shipping costs. Shippers partner with GlobalTranz to reduce their freight costs through:
- Competitive pricing with access to our network of more than 50,000 carriers
- Visibility into their shipments, rates, and reporting with our transportation management system
- Optimized route planning that balances speed, safety, and costs
- Reporting that helps identify waste and process inefficiencies
- Technology and expertise to help automate processes and identify consolidation opportunities
How a Logistics Partner Can Help
Despite these manufacturing challenges, the industry remains important to the U.S. economy. Luckily, there are a number of innovative technologies and solutions available to the industry that will help mitigate these challenges. The real challenge for the manufacturing industry will be to act. As an industry leader, you must take advantage of the innovation that stems from great challenge.
For manufacturers who want to further combat challenges and find smarter solutions, GlobalTranz is here to help. We are a full-service third-party logistics provider with award-winning customer service, exceptional industry expertise, and market-leading technology. We’re already helping manufacturers like you implement solutions to the challenges we’ve discussed today.