How is A Disrupted Supply Chain Lowering the Production in Factories

Today's supply chains are increasingly complex, and slight disruption will result in big data loss to the supply chain management team. Without supply chain data, it's very difficult for the production processes to be carried out as there is no clear visibility from the suppliers on the available resources to your organization.

A disrupted supply chain tends to affect the production processes of a firm indirectly. Below are different ways a disrupted supply chain can lower production in factories.

Loss of quality control

Factories with greater control over their direct suppliers and their suppliers' suppliers have improved control over the quality of the raw materials being supplied to your factory. Sometimes, certain products need you to have minimum standards of raw materials before creating them.

Otherwise, the products will come out as fake and cause a huge loss to your company. If you find yourself facing a supply chain challenge, opting for a course from six sigma will train you on the necessary techniques that will help reduce variation within and across the value-adding steps in the supply chain.

6Sigma.com offers in-depth training courses with necessary tools that will help you solve supply chain problems. With different training options available, you can choose what fits you - either classroom training, online training or webinar training.

Low-efficiency rate in production

Imagine having to wait for information on the available resources or the type of raw materials to incorporate in your production stage for hours when you have already set the first stage and completed the available tasks. Disruption in the supply chain results in poor communication, and the factory won't be able to cater to the delays through the deployment of backup plans.

These backup plans are essential for your factory as they help streamline the production process. Eventually, the efficiency rate in the production process is lowered, and your factory will keep on producing substandard goods.

Increased overhead costs

With a lack of accurate demand predictions, your factory will not reduce the existing overhead costs associated with storing slow-moving inventory to create space for the other goods being produced. Sometimes your factory may be forced to halt the production processes or look for available warehouses to hire for storage purposes.

These overhead costs would have been prevented if there had been accurate information from the supply chain. At some points, the costs are too high, and the factory has to limit its production capabilities and use the money allocated for that sector to cater to the warehouse fulfillment costs.

Poor risk mitigation

Poor risk mitigation is one of the factors that can halt your production processes in the company. With poor analysis of the big-picture and granular supply chain data due to disruptions in the chain, your factory is set to face challenges that will lower its production process.

Slow reaction to the supply chain disruptions will downgrade your factory production process as you won't have quality information on the new set standards of the products you are manufacturing. Moreover, you will also lack information on the labor supply shortage and face reality when the time comes.

Reduced cash flow

A proper supply chain management system will allow your factory management to make smarter decisions, accurately predict and respond to market and demand changes. Production processes require a standard budget for the processes to be completed effectively.

Setting a clear budget to ensure improved cash flow in your business due to disruptions in the supply chain management will reduce the cash flow set for the different stages. In addition, more partners in an organization are not likely to contribute effectively as they don't have the facts on what is happening. It will lower the productivity of the factory, making it face stiff competition from established firms.