“Logistics Pulse” is your cheat sheet and to-do list for everything about trade, the supply chain and logistics. We dive deep into the latest news headlines and industry trends and equip you only with actionable insights you can use to improve your business—no matter your industry or role in the supply chain. Presented by Mothership.

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According to a recent study, 72% of businesses worldwide reported significant supply chain disruptions in 2023. Delayed shipments, higher costs due to fuel price hikes, material shortages and uncertainty around policy or tax changes related to international trade are all becoming more common, which begs the question: Is the world supply chain falling apart?

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We explain the three most common ways supply chains fail and how businesses can avoid a repeat. We also explore whether there are any surefire ways companies can use to future-proof their supply chains and operations.

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What is a supply chain?

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Bri Policarpio  00:00

The division of labor is limited by the extent of the market. That's a quote from Adam Smith, the father of modern economics. In simple terms, he meant that businesses and economies grow by specializing and trading efficiently. But what happens when that system or our supply chains stop working? If you run a business, you likely already know. 

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Bri Policarpio  00:40

Maybe you've had orders delayed for weeks because your shipments got stuck at a port, or you had to eat extra costs when fuel prices shot up, or your supplier suddenly couldn't deliver, leaving you scrambling for an alternative. You're not alone. In 2023, 72% of businesses worldwide reported major supply chain disruptions, and 60% faced material shortages that slowed down production and increased costs. 

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So why do supply chains fail? More importantly, what can businesses do to prevent it? That's exactly what we're getting into today. We'll cover the biggest causes of supply chain failures, the most common mistakes that businesses make and how smart companies build resilience into their logistics. Let's dive in. 

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At its core, a supply chain is the network that connects your business to its suppliers and customers. It looks something like this: Raw material suppliers extract or produce base materials like metal, plastic or fabric. Manufacturers turn those materials into finished products. Storage facilities and warehouses hold and sort that inventory. Transportation systems include the ships, trains, trucks and planes that move your goods, and the retailers and customers are the final stop for your products to be sold or delivered. 

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When things run smoothly, a smartphone made in Vietnam can be in a California warehouse in under 24 hours. But here's the problem: The larger your supply chain, the higher the number of potential points of failure.

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The top three reasons why supply chains fail

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Bri Policarpio  02:17

As many business owners already know, it only takes one broken cog to slow down the entire machine. There are nearly infinite reasons why supply chains fail, but today, we're going to look into the three major categories. 

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The first is over-reliance on a single supplier. This happens when businesses make the mistake of relying too much on one supplier or region for critical components. 

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A textbook example is the semiconductor crisis of 2021. At the time, automakers like Ford, GM and Toyota were forced to halt production for months because they couldn't source enough microchips. Why? Because the world's chip supply was concentrated in just a handful of factories in Taiwan and South Korea. When those facilities experienced disruptions, there were no backup options. This wasn't just an inconvenience. It cost automakers over $210 billion in lost revenue. 

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The next major point of failure stems from demand-forecasting issues because supply chains aren't just about moving goods; they're about moving the right amount of goods at the right time, and that's where forecasting failures come in. Order too little, and you run out of stock, frustrating your customers and losing sales. If you order too much, you're stuck with excess inventory that ties up cash and warehouse space. 

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One of the best examples was the bull-whip effect during COVID. In early 2020, when the pandemic hit, companies slashed their orders because they expected a drop in demand, but when consumers started buying in bulk, there wasn't enough supply to keep up. This resulted in empty shelves, exploding prices and massive shipping backlogs. 

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Even today, companies deal with the whiplash effect, where they over-order to compensate for past shortages, only to find that demand has already cooled off. 

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And finally, there are transportation bottlenecks. Even if your suppliers are reliable and your forecasting is perfect, you still need to move your goods, and that's where the biggest risks are today. 

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Let's take a look at some root causes of transportation bottlenecks from the past. Port congestion in 2021 caused over 100 ships to wait off the coast of LA—for some, up to three weeks before they could dock. Trucking shortages made it harder to get goods from ports to warehouses, and fuel price volatility increased transportation costs, forcing businesses to either eat the cost or pass it on to consumers. 

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And, of course, it's worthwhile to mention that these three factors—over-reliance on a single supplier, demand forecasting failures and transportation bottlenecks are driven by internal forces. There are also a number of external forces that create challenges for businesses of all sizes—things like natural disasters and geopolitical tensions make a major impact on the business environment. Just take a look at Trump's second-term trade wars and tariffs and the California wildfires as some recent examples.

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How businesses can mitigate supply chain risk

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Bri Policarpio  05:16

Ultimately, there's no way to avoid these issues entirely, which makes mitigation the name of the game. One of the easiest ways to mitigate these risks is by choosing the right technology platform to power your business. Companies like Mothership make it easy to build resilience directly into your supply chain. 

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Mothership is a tech-enabled marketplace that matches freight with top carriers for more reliable, lightning-fast deliveries nationwide, specializing in less-than-truckload and same-day shipments. Its advanced artificial intelligence and algorithms optimize delivery routes and predict arrival times, providing businesses with a faster, more affordable way to manage their supply chains. 

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Here's how Mothership can future-proof your business: Relying on just one carrier for your transportation needs is a massive risk, and it puts all of your freight in one proverbial basket. When your one supplier, one carrier or one partner fails, your entire supply chain suffers. Mothership eliminates that risk. 

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Mothership partners with top LTL carriers nationwide, giving you access to the convenience of pre-negotiated rates without long-term contracts. Mothership's local same-day delivery network is powered by thousands of independent carriers who are carefully vetted, insured and meet strict performance criteria, so you don't have to worry about reliability, and instead of waiting hours or even days to find a truck, Mothership's system matches you with an available carrier instantly. Mothership empowers businesses by putting multiple high-quality options at your fingertips. 

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As we covered earlier, bad demand forecasting kills margins and creates chaos. If you order too much, you're stuck paying storage costs for excess inventory. Order too little, and you'll run out of stock. The truth is you can't always predict demand perfectly, but what you need is the ability to scale up or down instantly without the risk of long-term contracts or locked-in pricing. That's why Mothership offers instant quotes on demand with no commitments. You can get real-time pricing before you book—no waiting for quotes or playing the pricing game. You can also scale your shipping volume up or down instantly based on your real-time demand without penalties. That means no contracts and no volume minimums. You can ship one pallet today and 100 next week if you need to. That means whenever you get hit with an unexpected surge in orders, you don't have to panic or overpay. You can just book what you need and move on. Then, when demand slows down, you're not locked into unnecessary commitments. That's the power of real flexibility. 

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And finally, Mothership helps businesses beat transportation bottlenecks with real-time tracking and optimized routes. Intelligent routing and dispatching prevent unnecessary delays by adapting to real-world conditions; plus, every shipment comes with live tracking from pickup to delivery, so you always know exactly where your freight is. Most businesses don't have this level of real-time visibility into their logistics, so when something goes wrong, they find out too late. Visibility and real-time location data aren't just a nice feature; it's a competitive edge. 

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At the end of the day, you can't afford to wait for logistics problems to solve themselves. That's why businesses that partner with Mothership don't just survive supply chain disruptions. They outmaneuver them. 

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It can feel like supply chain disruptions are an inevitable part of today's interconnected business landscape. However, understanding their causes and partnering with the right technology can minimize their impact on your operations. 

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If you're interested in seeing what Mothership can do for your supply chain, head to Mothership.com, to get started today. 

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For more insights like these, don't forget to subscribe to Logistics Pulse on YouTube, Spotify, or wherever you get your podcasts.