The supply chain, to many, is the heart and soul of any business. If you don’t have a fully optimized and effective supply chain, you won’t have any products or services to offer customers. While you should follow several best practices, here are a few of the most important ones.
Supply Chain Professionals
The first thing you should do is to not handle the supply chain at all. A supply chain professional is the ace up your sleeve that can help optimize and perfect your supply chain to ensure it runs smoothly.
More importantly, a supply chain professional will have the experience and expertise to handle problems you may face, whether it be finding shipping boxes or not getting the right materials to your factory.
Build Supplier Partnerships
A crucial part of material procurement is building relationships with your suppliers. A strong relationship will often lead to better and quicker service, discounted costs, as well as “extra effort” being made on their part in the event of a problem.
You also want to ensure that you always keep an open line of communication open with your suppliers in the event of a spike in sales or an opportunity you want to take advantage of; you will want your supplies quickly so as not to miss out.
While supplier relationships and loyalty are both important, sometimes problems can be unavoidable. If you are relying on one supplier for something, if that supplier has a shortage or something similar, you don’t get your materials.
Because of this, having a diversified portfolio of suppliers ensures you can manage and work through any problem or shortage you may face.
Managing risk is another crucial element of your supply chain. As mentioned already, a supply shortage can derail your operation almost overnight, and having a backup plan can, at the very least, minimize any damages.
But this extends to countless other potential problems. Something as bizarre and unlikely as a freak storm can drastically slow down or even stop the transportation of goods; it is important to be prepared for most outcomes, as you don’t want to stop production or sales but rather slow them down until the problem has been resolved.
Using statistics and metrics, demand forecasting is another vital part of your supply chain. One of the biggest mistakes you can make is spending too much on supplies you don’t need or not being prepared for a spike in sales and not having enough materials or products.
While this is something that will need to be done over time and in collaboration with sellers, being able to predict, as accurately as possible, when there will be a spike or drop in sales can help you save a lot of money and time over the long and short-term.
With the help of your team and supply chain professional/s, you will have access to a plethora of metrics and data that can help you make well-informed and smart decisions. A supply chain needs to be quantified so that you can analyze it and see where your strengths and weakness lie.
This can help you figure out big and small problems, such as it is better to have three small deliveries of supplies a week or two larger ones a month. Is there a way to lower warehouse running costs? Do you have a balance between inventory and sales? While these are basic examples, being able to optimize them will improve your efficiency and your profits.
One mistake that you should try and avoid at all costs is having too much of a gap between your teams. While this doesn’t refer to a physical gap, it is more in reference to not having an open and well-used line of communication between all parts of your business.
This can easily be done by creating a position where the employee acts as a liaison of sorts between all teams. This can help improve collaboration, communication, efficiency, and all-around performance.
Invest in Technology
In this day and age, there is so much technology and software available that can help every part of your supply chain. Some businesses use something as simple as an Excel spreadsheet to manage aspects of their supply chain.
The problem is different parts of your business will require different systems, as well as manual processing. This can lead to avoidable mistakes, as humans aren’t perfectly programmed robots.
A better option, for example, is to invest in a piece of tech that can automate a tedious and time-consuming process, thus freeing up an employee to be used better elsewhere. This can save a lot of money in the long run and can also almost eliminate the chance of a costly mistake.
Finally, it is always important to consider the future when adopting new technologies, systems, and processes. With growth, you will encounter a bigger workload and much bigger problems.
Something that can solve a small problem today may not be able to handle a bigger problem down the line, and constantly having to upgrade systems to handle these growing problems can become a money pit. Instead, put in place systems that can solve your problems of today and in the future, putting you in ahead of it before it even becomes a worry.