Effects of Supply Chain Vulnerability

Supply chain vulnerability is an issue plaguing many businesses in today's world. Some have figured out some creative solutions to their problems and some are still loosing valuable business because of how vulnerable their supply chains are. What is supply chain vulnerability anyway? It is the point of weakness in your supply chain network that causes your business to decline in growth due to inefficient business operations. Supply chain vulnerability results in issues like theft, illegal product diversion, fraudulent activities and parallel importation of your products. These issues affect the way your business is likely to operate going forward. Some effects are seen immediately and some are long-term. Here are some issues they may result when your supply chain is compromised.

Effects of Supply Chain Vulnerability

  • Prevent Lower sales growth
  • Prevent Growth in Cost
  • Prevent Reduced operating income
  • Prevent brand image erosion

Sales Growth 

When products are stolen from your supply chain, it may or may not impact your business immediately because depending on the volumes you are handling, some theft is easier to write off as defected products. When the theft is consistent over a period of time with varying amounts, it affects the estimated growth of sales the company was anticipating and therefore stifles the company's growth.

Cost Growth

The higher the theft rate, the higher your cost rate. The cost your company uses to purchase raw materials will not match the bottom line because products are being stolen consistently. Therefore the lack of traceability within your supply chain will cost you more.

Reduced Operating Income

This ties in to the previous points on sales growth and cost growth. The income expected due to business operations is reduced as a result of a defect in your supply chain.

Brand Image

If your business is not efficient at meeting your consumers needs then this reflects on your overall brand. This can be caused by an inefficient supply chain. If products are being diverted and the accounted for demand is not matching the supply, then it creates problems in your operations.

There have been many technological solutions developed to handle this issue for companies of all sizes. Track and Trace solutions being the most popular of them. Sproxil has a product called the Sproxil Informer, which helps businesses optimize their current supply chains. This is done by helping brands secure and monitor their global supply chains, from the manufacturer through the warehouse to the retailer and all points in-between, with optional consumer engagement to provide true end-to-end security.

To learn more, contact us at team@sproxil.com

supply chain vulnerability