How to Identify and Eliminate Internal Issues in Supply Chain Management

Internal System Errors and Supply Chain Disruptions Are a Burden Most Companies Cannot Afford

An inefficient, disorganized supply chain is tantamount to announcing the end for a business. It affects customer reliability and retention rates and hinders the acquisition of new customers. A malfunctioning supply chain also consumes company resources through returns and repairs, delays, and rework. While external supply chain issues are widely understood, internal problems—such as inadequate processes, outdated systems, data silos, stagnant leadership, and other human factors—are rarely discussed but equally destructive. Given the severe damage that internal supply chain issues can cause to a company, identifying and eliminating these problems is critical.

Why Addressing Internal Issues Is Critical for Supply Chain Management

All companies face uncertainties from labor, transportation, raw materials, suppliers, carriers, and other industry factors, as well as external supply chain issues such as trade barriers, tariffs, changes in trade laws and regulations, and compliance requirements. All these issues must be addressed; however, if a company focuses all its efforts on preventing inevitable global bottlenecks while ignoring internal problems that can be prevented, the company will suffer losses.

For example, British crisp brand Walker Crisps experienced a supply chain crisis in 2021-2022 due to multiple internal IT failures, leading to severe product shortages. While the business world was shocked by COVID-induced supply chain shortages, Walker could not provide products to suppliers and consumers for months because of its system issues, resulting in an overall revenue drop of 3.5%.

The global supply network remains unstable, and internal system errors and supply chain disruptions like those faced by Walker are a burden that most companies cannot afford. In fact, addressing internal supply chain disruptions is a key factor in helping companies break through the status quo.

Post-pandemic, PepsiCo—Walker’s parent company—completely transformed its supply chain by optimizing digital platforms and systems, integrating data, and focusing on reducing its carbon footprint, which resulted in overall revenue growing from $79.5 billion in 2020 to $92 billion as of June 30, 2024. PepsiCo’s success demonstrates that solving internal supply chain issues not only prevents bottlenecks, product shortages, and customer dissatisfaction; companies investing resources in addressing these issues have a clear competitive advantage.

The Three Main Obstacles to Internal Supply Chain Bottlenecks

PepsiCo’s supply chain success is echoed by other global brands such as Coca-Cola, Toyota, Walmart, Heineken, and others, which prioritize optimizing internal operations in their supply chain management rather than overspending on external uncertainties. By studying how these companies have reshaped their supply chains, we can clearly see that internal supply chain challenges mainly fall into three categories:

1. Process Issues. These issues involve managing the end-to-end process of a company’s products or services within its supply chain. Often due to over-reliance on manual processes rather than systems for data entry, risk management, and procurement, incomplete bill of materials, and lack of transparency and visibility in planning, purchasing, and manufacturing processes.
2. System Issues. Inefficient IT systems that lack collaboration between enterprise business functions and operations are a typical example of systemic issues. Problems arise when companies use outdated point-to-point systems or if system operation teams are not integrated into larger decision-making processes. Isolated system functionalities and separated personnel prevent the establishment of sustainable economies of scale, leading to nightmares in rebuilding business functions.
3. Data Issues. Data issues occur when a company does not prioritize data management, treating it as a forgotten step rather than a core role within its supply chain. When companies use poor-quality, incomplete, and inflexible data, they end up with incomplete and inaccurate datasets that cause downstream disruptions and prevent any form of scalability.

All three types of internal supply chain issues consume company time, resources, and capital; therefore, addressing them is crucial. When companies successfully resolve these issues, they not only expand and improve their business through data-driven innovation but also move beyond mere survival.

Developing Holistic, Data-Integrated Solutions to Promote Supply Chain Prosperity

No successful company can solve one supply chain issue while ignoring others. Process, system, and data issues are inherently interconnected; they either hinder a company’s development or propel it to new heights. Therefore, all companies must address these issues simultaneously, starting with data.

Data is the currency that runs the supply chain. With comprehensive, high-quality datasets, businesses can confidently ensure their supply chains do not encounter preventable bottlenecks and make decisions based on quantifiable data. Prioritizing data management means updating old systems that cannot handle large datasets, fail to transfer data across business functions, or rely excessively on manual data entry and organization. Prioritizing data in the supply chain also means reforming outdated manufacturing and procurement processes that overlook data-supported systems. By reorienting internal supply chain systems and processes toward data management, companies can conquer all three issues at once.

Luckily, today’s organizations coexist with many new technologies and strategies that can reliably and efficiently prioritize data management and integration within their supply chains. By investing in artificial intelligence (AI), the Internet of Things (IoT), and end-to-end enterprise resource planning systems (ERP), businesses can reduce manual labor and delegate high-cost, high-risk, and time-consuming processes to more efficient, data-integrated systems and tools. These new technologies are key to making real-time, data-driven decisions. They help companies merge traditional metrics such as cycle times, inventory turnover rates, and on-time delivery with newer calculation standards like carbon footprint, data accessibility, data integrity, and analytics cycle times.

Don’t Just Survive: Innovate and Thrive

Internal challenges can destroy any supply chain, but directly addressing these challenges also provides a unique opportunity for leaders to foster an innovative, cutting-edge collaborative company culture from top to bottom. Instead of creating silos between business functions and focusing on fixing broken systems to maintain the “status quo,” leaders and managers can adopt new technologies, encourage cross-departmental collaboration, and invest in skill development to elevate their supply chains to new heights. By adopting the right strategies and approaches with a mindset centered on continuous innovation, companies can identify, solve, and minimize internal supply chain issues, leading to prosperity.

About the Author:

Abhishek Chaudhuri is the Chief Project Manager for Data Governance at a multinational technology company. With over 18 years of experience in data management, data governance, product management, business operations, material management, and supply chain operations, Abhishek holds an SAP Associate certification and an MBA in Marketing. He can be reached on LinkedIn.

Source: New SCMR