10 Ways to Improve Your Supply Chain Strategy
Rachael Budd, Founder and President of Transolve Global, an international freight forwarding company, shares ten top ways to help you review and improve your supply chain strategy.
The supply chains of today are significantly different to the supply chains of the not too distant past. However what remains constant throughout times of change is the fact that an organisation’s supply chain is not just another business function, it is a critical business process.
An optimised supply chain delivers a multitude of benefits to a business: time and cost efficiencies, streamlined activities and the ability for its team to operate with ease. Additionally, it helps a business gain (and sustain) a competitive advantage in the marketplace, enabling the organisation to maximise its value to the end-customer.
Given the uncertainties that continue to afflict global logistics, from the ongoing effects of the COVID-19 pandemic, to container shortages, route congestion, the Suez Canal blockage and more, there has never been a more pertinent time to review, refine and optimise your supply chain.
Outlined in this article are ten top tips to help you review and improve your supply chain strategy, so you can ensure it is operating in peak condition and is able to support your business growth.
Tip 1: Clear communication is key
A supply chain is not a standalone process and cannot operate at maximum efficiency without the “buy-in” of all relevant parties – from internal team members through to external suppliers.
Maintaining transparent and clear communication between your organisation, suppliers and other relevant parties is crucial to the success of your supply chain. A fundamental factor in achieving this is fostering a honest and supportive working culture, one where people are at ease reporting any issues that arise such as increased lead times or limited product availability.
A transparent working culture combined with clear communication across your supply chain will optimise its efficiency. It will ensure that all stakeholders are working collaboratively and are on the same page, resulting in an efficient, resilient and agile supply chain process.
Tip 2: It’s not just about cost
Whilst business is almost always about the bottom line, price should not be the sole consideration when selecting a supplier. Instead, it is ideal to focus on the total cost of ownership/consumption (TCO) of a product or service.
The cost of acquisition for most products and services is only 25-40 percent of the TCO, so it is important to focus on factors such as operating, warehousing, environmental effects, and transportation costs. By taking these factors into consideration you are prioritising value and long-term success over the sole factor of price – an approach that will deliver benefits over the long-term.
Tip 3: Shift contract management to the supply chain
Whist most organisations appreciate the importance of contracts, more often than not they are relegated to an office drawer and soon forgotten. Turning management of supply chain contracts into a function of the supply chain itself will ensure that all contracts are collected and maintained in a central place, and can be more easily reviewed on a regular basis. It also means that your supply chain partner will be more readily able to leverage spend where there is greater opportunity for reducing costs and minimising risks, helping to further refine and optimise your supply chain.
Tip 4: Optimise inventory management
In order to optimise your organisation’s supply chain, it is crucial to regularly review your approach to inventory management.
Whilst holding inventory has traditionally been considered an unnecessary expense, it’s essential to look at the logistics landscape in its totality to see if this continues to hold true.
For example, the current logistics landscape is unidentifiable when compared to years past. Whilst minimising inventory used to be considered an optional approach, it would prove less than ideal in today’s trading environment.
The ongoing volatility, which is a result of a myriad of factors, including pandemic-related economic closures, port congestions, vessel delays and more, all point toward the preferred approach of ensuring your inventory levels are sufficient and adequately pre-planned in order to minimise the risk of stock shortages.
Tip 5: Source suppliers strategically
As aforementioned, a supply chain is not a stand-alone process. It is the sum of many different parts and one of the most important elements is your supplier.
Strategically selecting your suppliers is critical as they are central to a successful supply chain. A positive collaborative working relationship delivers a multitude of benefits such as increased efficiencies, streamlined operations, reduced costs and greater responsiveness.
And in volatile times, such as the current global trading landscape, your supply chain partner should be able to work cohesively with your business, navigating you through the current challenges and advising you of how best to manage the unprecedented logistics environment.
Tip 6: Training the Team
Regardless of role or industry, sufficient and ongoing training of staff is essential to the success of an organisation. From an operational perspective, training helps to create more efficient and knowledgeable team members who are better equipped to overcome and resolve issues, challenges or mistakes.
However, training should extend beyond teaching individuals the duties and responsibilities of their roles. It should be used as an opportunity to share the company’s vision, mission and values, their goals (both long and short term), any action plans, and how each individual can contribute towards the achievement of these plans.
Bringing your team members on your organisation’s journey results in innumerable benefits to your business. It creates a more positive working environment and empowers employees, making them feel involved and valued. And ultimately, it ensures that everyone is aligned with the overall goals of the organisation, helping to optimise the overall supply chain.
Tip 7: The devil is in the detail
Too many organisations rely on the benefit of hindsight to review and revise their workflows and processes. However effective decision-making regarding the optimisation of your supply chain depends on accurate and timely data and information.
Through the implementation of effective technology your organisation can harness the power of proactive planning. There is a myriad of Enterprise Resource Planning (ERP) software available that can provide your business with real-time reports and valuable insights about your supply chain. For example, you can utilise ERP software to achieve real-time inventory management and the automatic placement of orders with vendors when inventory levels drop to a certain (allocated) level.
Furthermore, applying the same ERP across all areas of your supply chain will help to standardise processes, increase accuracy, eliminate data silos, reduce miscommunication, all whilst increasing efficiencies and saving time and money.
Tip 8: Information transparency & visibility
The presence of any data silos negates the ability to run a lean and optimised supply chain. So it is vital to ensure that your logistics process is transparent across the board in order to have a successful supply chain.
Using a supply chain management platform can provide your organisation with more supply chain visibility across your business. This higher level of visibility helps to minimise mistakes and miscommunication whilst streamlining operations across the board.
Tip 9: Regular reviews and risk management
A ‘set and forget’ approach to supply chain management will inevitably result in bottlenecks, miscommunication, non-aligned parties and an array of time and cost inefficiencies.
Therefore in order to ensure compliance, clarity, efficiency and alignment, an organisation must implement and adhere to a regular review of procedures and policies.
A disciplined approach to reviews also serves to mitigate the risk of theft, fraud and the like. A well-structured risk management process should achieve several primary objectives: the identification of risks and the probability of them eventuating, a forecast of potential financial impact and the outline of a proactive monitoring and prevention strategy.
Tip 10: An ethos of continual improvement
Global logistics is a competitive and challenging market space. One that has been amplified by a complexity across the global landscape that is unprecedented to date.
The pandemic, closed borders, container shortages, port congestions, vessel delays, and more are contributing to an volatile and forever changing environment, where a new world of logistics is evolving on the go.
Never before has it been so vital to be an agile, responsive and proactive business with an optimised supply chain that is ready to handle whatever comes its way whilst also delivering value (and output) to the end customer.
Such a dynamic environment requires a dynamic business. A steadfastly held ethos of continual refinement and improvement will not only hold your business in good stead during these ever-changing times, but will also undoubtedly help you achieve long-term business success.
10 Ways to Improve Your Supply Chain Strategy
There’s no time like the present to take an inward look at your supply chain to see how best to improve it. Optimising your supply chain will deliver a raft of benefits to your business. From reduced lead-time and fewer product availability issues, through to time and cost savings and of course, increased customer satisfaction, there is no doubt that all areas of your business will improve once you ensure your supply chain is in peak condition.