THE MAJOR OBSTACLES IN A

SUPPLY CHAIN SYSTEM

Presented by
Reg. :
1. 2013334048
2. 2013334049
3. 2013334051
4. 2013334052

Department of Industrial and Production Engineering, SUST

OBSTACLES IN SUPPLY CHAIN
Increasing product variety, decreasing product life cycles,
demanding customers, and global competition all make creating
supply chain strategies more difficult, as these factors can hamper
supply chain performance. The major obstacles are listed below :

1. Increasing variety of products

2. Decreasing product life cycle
3. Increasingly demanding customers
4. Fragmentation of supply chain ownership
5. Globalization
6. Difficulty executing new strategies
INCREASING PRODUCT VARIETY
 Increasing product variety may cause :

1. Difficulty in forecasting
2. Raises uncertainty
3. Difficulty in maintaining efficiency and
responsiveness.
DECREASING PRODUCT LIFE CYCLE
 Decreasing product life cycle may cause :

1. Increases uncertainty
2. Difficulty to co-ordinate and create a good match
between supply and demand
INCREASINGLY DEMANDING
CUSTOMERS
 Increasingly demanding customers may cause :

1. Difficulty to cope with the customer demand

2. Difficulty to maintain product quality
3. Difficulty to maintain lead time, product performance
and cost.
FRAGMENTATION IN SUPPLY CHAIN
OWNERSHIP
 Fragmentation of supply chain ownership may cause :

1. Difficulty to co-ordinate between different ideas,

policies and interests
2. Difficulty in achieving goals and objectives
3. Reduction in overall profit
GLOBALIZATION
 Globalization may cause :

1. Increased competition
2. Decreased number of customers
3. Shorter response time
DIFFICULTY IN EXECUTING NEW
STRATEGIES
 Difficulty in executing new strategies may cause :

1. Difficulty in choosing which type of strategy will best

suit the system
2. Often choosing strategies which will ultimately result
in less profit
 All of the obstacles discussed earlier are making it more difficult
for companies to achieve strategic fit in the supply chain. These
obstacles also represent a tremendous opportunity in terms of
untapped improvement within the supply chain. The increasing
impact of these obstacles has led to supply chain management
becoming a major factor in the success or failure of firms. There are
some other obstacles in supply chain management system and they
are :

1. Incentive obstacles
2. Pricing obstacles
3. Information processing obstacles
4. Behavioral obstacles
5. Operational obstacles
INCENTIVE OBSTACLES
 Incentive obstacles What is incentives obstacles? It
refers to situations in which incentives offered to
different stages or participants in a supply chain lead to
actions that increases variability and reduce totalsupply
chain profits.

 It includes :
1. Local optimization within functions or sales stages of
the supply chain
2. Sales force incentives
PRICING OBSTACLES

 It includes :
1. Impact of one action in other stages of the supply chain
2. Unable to identify the root causes
OPERATIONAL OBSTACLES

 It includes :
1. Large replenishment lead time
2. Rationing and shortage gaming
INFORMATION PROCESSING
OBSTACLES
 Information processing obstacles refer to situation in
which demand information is distorted as it moves
between different stages of the supply chain, leading to
increased variability in orders within the supply chain.

 It includes :
1. Forecasting based on customer demand not on orders
2. Lack of information sharing
BEHAVIORAL OBSTACLE
 It refers to situation in which the pricing policies for a
product lead to an increase in variability of orders
placed.

 It includes :
1. Duplication of effort
2. Unable to identify the root causes
CONCLUSION
 Increasing product variety, decreasing product life
cycles, demanding customers, and global competition all
make creating supply chain strategies more difficult, as
these factors can hamper supply chain performance. The
increase in globalization of the supply chain and
fragmentation of supply chain ownership has also made
it more difficult to execute supply chain strategies.
THANK YOU