Massive inefficiencies in North American supply chains result in estimated annual losses of $1.8 trillion, prompting calls for comprehensive reform leveraging technology, workforce development, and strategic realignment to boost resilience and profitability.
North American businesses are grappling with a massive financial drain stemming from inefficient supply chains, with estimated annual losses reaching an eye-watering $1.8 trillion. This figure amounts to nearly 8% o...
Continue Reading This Article
Enjoy this article as well as all of our content, including reports, news, tips and more.
By registering or signing into your SRM Today account, you agree to SRM Today's Terms of Use and consent to the processing of your personal information as described in our Privacy Policy.
f the region’s gross domestic product, signalling a critical area in need of urgent attention across industries.
The sources of these losses are multifaceted. According to supply chain expert Dr Kenneth Moodley, chief executive at Nikshen Global Solutions, inefficiencies range from poor demand forecasting leading to excessive inventory holding costs, to capital tied up in surplus stock and mounting warehouse expenses. Transportation inefficiencies also contribute heavily, caused by suboptimal routing and unreliable carriers, which, coupled with labour waste from slow order fulfilment and production bottlenecks, amplify the problem. Customer dissatisfaction and lost sales emerge when products are simply not available on time. Additional challenges include a skills gap within the workforce, outdated processes unable to keep pace with expanding business needs, inadequate enterprise resource planning (ERP) systems, excessive waste of input resources, and insufficient measurement and management of productivity.
Supply chains are often the invisible backbone of businesses, navigating complex networks of suppliers, departments, geographies, and customers. Yet they frequently remain underfunded, undervalued, and poorly managed. When breakdowns occur, consequences ripple far beyond immediate operational impacts, leading to missed revenue opportunities, higher costs, diminished customer service levels, and strategic decision-making paralysis.
The urgency for reform is echoed by recent industry research showing the staggering broader economic impacts of supply chain disruptions. A survey commissioned by GEP found that up to $4 trillion in revenue may have evaporated worldwide, with many US and European firms reporting revenue losses between 6% and 20% in 2020 alone. This underscores the ongoing vulnerability and the critical need for supply chain resilience and redundancy.
In retail, inventory discrepancies, such as stockouts and overstocks, compound these losses. Retailers reportedly lose approximately $1.2 trillion annually due to such issues, driving home the importance of precision in inventory management and operational efficiency.
Moreover, contemporary supply chains are further challenged by external pressures including geopolitical tensions, tariff wars, and natural disasters. For instance, North American manufacturers have recently cut orders for raw materials and intermediate goods, indicating a cautious stance amid ongoing tariff disputes and global supply uncertainties. These shifts highlight a strategic recalibration within supply chains as companies navigate evolving demand and trade conditions.
Rising transportation costs, driven by fuel price hikes and labour shortages, have surged by 27% over two years, further squeezing margins for logistics providers. Specific sectors, such as the grocery supply chain, illustrate infrastructure constraints like outdated cold storage facilities that increase redundant transport miles and costs, ultimately contributing to delays and inefficiencies.
Addressing these multifaceted challenges calls for a holistic approach. Key areas for improvement include enhanced overall supply chain management frameworks incorporating safety, health, environment, and quality (SHEQ) principles; alignment of metrics across strategic, tactical, and operational levels; continuous improvement in people, processes, and systems; and smarter use of technology such as automation, AI, and the Internet of Things. Data-driven decision-making and system-thinking methodologies are vital for optimising procurement, supplier diversification, and better understanding of routes to market, including import/export dynamics and tariff structures. Above all, an uncompromising focus on productivity is essential at every stage.
Companies that succeed in transforming their supply chains stand to reap significant benefits: substantial cost savings, greater efficiency, accelerated growth, enhanced competitiveness, and the establishment of sustainable, adaptable business models. In today’s fast-paced environment, where speed, accuracy, and resilience determine market leaders, resolving supply chain inefficiencies has shifted from being an option to an imperative.
Dr Kenneth Moodley invites businesses facing specific supply chain challenges to seek tailored advice, underscoring the importance of expert guidance in navigating these complex issues.
This landscape of loss and opportunity highlights that the future of North American commerce depends heavily on how effectively enterprises tackle their supply chain problems today.
Source: Noah Wire Services
