If your business deals with physical goods, you’ll know how critical it is to keep a close eye on all aspects related to your inventory. Proper inventory management means the business will be able to monitor and then streamline each of the processes along their supply chain to maximize efficiency and, in turn, profits.
A successful business operates by outsourcing key tasks to individuals or other companies who are experts in the required field. The task of managing and optimizing a company’s supply chain is no different and supply chain consultants are the experts in analyzing and implementing strategies in this field.
Supply chain consulting is now even more important than ever with the current global pandemic presenting multiple unique challenges for the distribution of goods around the world.
Important Factors for Supply Chain Consulting
To make sure you get the most out of optimizing your supply chain, this article will outline the most important factors when it comes to supply chain consulting for your business.
Analyze the Entire Chain
Although many firms claim to be experts in the supply chain, some of them may not work across the entire chain. This can be a problem if you require expertise throughout all of your supply processes.
For example, a consultant who only has key expertise in distribution center layout would be ideal for solving issues related to storage space in your warehouses and is going to fix problems by optimizing your warehouse layout.
This is great and can be helpful but there are many other areas these experts might have overlooked. For instance, the real problem could lie further up the chain and your overcrowded warehouses, in reality, are merely a result of some poor planning elsewhere.
To get the most out of hiring a supply chain consulting firm, your business needs to ensure they have a wealth of knowledge and experience across the entire chain. As a result, the firm will be better prepared to analyze the chain deeply and uncover the root of any problems.
Crucial Supply Chain Metrics
The success of your supply chain depends on you knowing a set of key metrics. These metrics can be used to measure progress and compare data, which will tell you exactly how the company has been performing, where improvements are needed, and what changes have been a success or failure.
There are multiple metrics a business can track and the ones that make sense to use are going to vary from business to business. With that being said, here are some of the key supply chain metrics almost all companies will benefit from collecting and studying:
Cash-to-Cash time cycle – The period between a business paying cash to their supply and receiving cash from the customer.
Perfect order ratio – Measure your ability to deliver orders to your clients and customers without incident. An important metric for discovering flaws in the supply chain and increasing customer retention.
Freight bill accuracy – Displayed as a percentage and calculated using the following: (error-free freight bills/total freight bills) multiplied by 100. Knowing this percentage allows the business to improve shipping accuracy by spotting and rectifying and damaging trends in freight bills.
On-time shipping – Calculating the percentage of orders that have been shipped on time allows you to understand exactly how long each order is likely to take to arrive with a particular client. You can also set product-specific benchmarks so your team can track and optimize shipping processes at a more granular level.
Inventory turnover – The number of times a company’s inventory has been sold throughout a specific time frame, which is a great indicator of production efficiency, fulfillment abilities, and sales management.
Gross margin return on investment – A critical metric for all businesses to understand. By tracking gross ROI on all items in your inventory, you can quickly outline poor performers as well as areas where it makes sense to invest more heavily.
Hiring the best consultants in the entire world is no good if the necessary changes aren’t implemented into your business efficiently. Some supply chain consulting firms will be able to implement the changes for you or you may decide to use in-house resources instead.
No matter how you decide to implement the changes, a good consulting firm will provide a clear and detailed implementation plan, even if they won’t be assisting directly with making the changes.
This plan will highlight the proposed tasks your business is to take in an effort to improve processes and profits.
After the consulting team has performed a thorough assessment and drawn up their conclusions, they will put forward a suggested plan for implementing the changes they feel will move the business forward.
An implementation plan should outline the required tasks, timeframes, resourcing, risk management, and costing information where possible.