5 Myths About the Supply Chain Industry
There are many misconceptions regarding supply chain management. Some are pretty straightforward and well-documented, but recently, additional myths seem to have surfaced. From assumptions about who supply chain management is for, to misunderstandings about events in recent years, debunking these myths is crucial for anyone wanting to understand the industry better. Whether you’re a small business owner, an aspiring supply chain professional, or just curious about how goods move from one place to another, it’s important to separate fact from fiction. Let's dive into some of the most common myths and set the record straight!
Supply chain management is only relevant for large companies
This myth is pretty common, but it needs to be on the list because it's so inaccurate. Whether you are a small business, a large corporation, or a consumer, understanding supply chain management is important. For consumers, knowing about supply chains can help them make informed decisions about where products come from, how much they cost, and why delivery times might be longer than expected. Small businesses often assume they only have a few options, like Canada Post, FedEx, or Amazon. Because they don’t take the time to explore different strategies and options for their supply chain, they end up with high shipping costs that eat into their margins, making survival difficult.
Small businesses do not need to worry about global supply chain issues.
Similar to the last point but more pointed, small businesses often look at issues like overseas conflicts, container shortages, and politics as not relevant to their supply chain. The thing to understand here is that the global supply chain is just that—global. Think of it like the butterfly effect. A rail strike in Canada? Your small parcel costs may go up due to a strain on the trucking industry. Conflict around the Suez Canal? Some of your vendors might be short on stock that you need. The more globalized the supply chain is, the more we need to be aware of what’s happening in other parts of the world, as it will inevitably impact small businesses. Even events that seem unrelated at first can create ripple effects that disrupt delivery schedules, increase costs, and reduce availability of critical supplies. Staying informed and adaptable is key to navigating these challenges.
Cost cutting does not equal efficiency.
Cutting costs does not equal being more efficient. While sometimes "cutting the fat" is necessary, it is not the only way to increase efficiency in a supply chain. It’s a fine balance to spend enough on talent, technology, and equipment to boost efficiency without overspending or sacrificing quality of work. The most efficient models aren’t necessarily the cheapest; they provide the best product or service for a reasonable price and optimal resource utilization. Investing wisely in skilled employees, advanced technology, and reliable equipment can lead to significant improvements in workflow and output. Blindly cutting costs, on the other hand, can end up costing more time and money in the long run, or even worse, it can jeopardize the business itself. Efficiency should focus on long-term gains and sustainability rather than short-term savings.
Most supply chains are well thought out.
This one is the funniest. In reality, most supply chains, especially the largest ones, are held together by paperclips, chewing gum, and good vibes. Many companies start with an idea for a product, pouring all their time, energy, and money into the development, but they often forget that they need to produce and deliver that product to customers. So, they hack together a supply chain just to “get by for now.” Fast forward a few years, and they only make changes to their supply chain when there's an issue with cost, time, or quality. At that point, they react rather than strategize, applying band-aid solutions on top of the original "just for now" plans.
This approach is understandable; the world of supply chain management is vast and can be intimidating. When knowledge is lacking, making the right decisions becomes even harder. Most companies could benefit significantly from a supply chain audit or mapping service to truly understand the gaps, challenges, and opportunities within their processes. Proactively investing in a well-thought-out supply chain strategy can save companies from future headaches and inefficiencies.
Companies learn from events like the pandemic and the Suez Canal incident.
Supply chain was trending everywhere—from mainstream media to TikTok to YouTube—during the pandemic, yet few people learned anything substantial. It’s been four years since the pandemic and three years since the Ever Given incident in the Suez Canal, and most companies have reverted to their pre-pandemic supply chain "strategies." While some have modest contingency plans, many do not. Often, companies only pay attention to their supply chains when something goes awry, putting them in a reactive state rather than a strategic one.
We are seeing this again with the conflict in the Middle East, where only 35-40% of ships that would normally sail the Red Sea are doing so. Few companies have a solution for this, so many are doing what they did during the pandemic: throwing money at the problem and hoping it resolves itself. While it’s understandable that during economic downturns companies decrease stock to save cash flow, having additional inventory is not the only way to address these issues. Having multiple vendors in different areas of the world for raw materials is a great start. Companies need to get more creative and increase the flexibility of their supply chains.
Why does it matter?
There are always going to be assumptions and misconceptions in this industry; the key is to continually be learning and staying informed about the supply chain industry. Understanding the nuances of supply chain management can lead to better decision-making, increased efficiency, and more resilient businesses. As they say, “the more you know.” Debunking these common myths can all contribute to a more efficient and effective supply chain landscape. So, keep learning and stay curious—the business will thank you for it.
