Globalization, COVID, and outsourcing have all created turmoil and complexity in supply chain management. Have you made changes in the business to keep up with the changes in the world? Truth is today’s international supply change management practices look very different from yesterday’s.
In order to grow or even maintain profits it is necessary to be able to respond quickly to changes in industry trends and customer expectations. CEOs and other supply chain management professionals need to look to proven practices to stay afloat in this rapidly changing economy.
1. Set Current Benchmarks and Set Future Goals
Take measurements and set quality standards for your entire business, but especially for the supply chain. Utilize current benchmarks to set future goals. Goals that are realistic and attainable.
Embrace a corporate culture of measure, improve, measure and improve again. Get your team accustomed to the idea of continuous improvements. Apply this principle from the top down. When all employees are being held to high standards, they are more likely to embrace improvements and be content at work.
2. Be Cautious with Software Selection
Technology is used to help manage the most efficient supply chains we know of today, think Amazon. They use software to manage every aspect of their supply chain right down to robots in the warehouses and drone deliveries.
Amazon has applied technology successfully in part because they wrote their own or customized existing solutions. A lot of companies today purchase a software product and then try to mold their process to those that are implemented in the software.
Instead, start with mapping out your processes and then choose the best reputation software that most closely matches your processes. How do you know if you’ve chosen the right software for your processes? There should be few “work arounds” and you should be able to easily extract the data you need.
One of the current trends in software are systems that can be configured by non-developers. Sometimes these are referred to as low-code applications. This might be your best choice if your processes are required to frequently change, such as in health care or food suppliers who are subject to government regulations that are updated annually.
3. Don’t Be Afraid of Big Data
Big data is a phase that can scare off a technophile! But it’s really quite a simple concept. Advances in computer hardware in the past few decades make it possible to store and analyze more data than at any other time in history.
A simple example to understand what big data is and how it might work for a supplier? Rewards cards from drug stores. If a woman between 20 and 30 walks into her local drug store and purchases vitamins and lotion in the same visit, there’s a good chance she’s pregnant. The drug store can take advantage of that information and send her coupons for formula and diapers. Of course the drug store owner need to take consent to communicate before sending any emails or direct mails.
Businesses don’t have to be experts in big data to take advantage of it, there are plenty of consulting options. Just know that big data can help you identify inefficiencies and quality issues in your supply chain. It can also help you expand your customer base and to improve customer retention.
4. Build Close Relationships with Key Suppliers
Relationship management is a two way street, both the buyer and the seller must make an effort to work together to enhance the relationship. Keep in mind that the relationship doesn’t end when a contract is signed, that is the beginning.
You will work closely throughout delivery, manufacturing and any subsequent orders. They are really your business allies. Keep in frequent communication and create a path for problem resolution that includes escalation options.
Create a role within the company specifically for supplier communications. Make it easy for suppliers to work with you. With a close relationship in place, you will be in position to fully utilize your supply base.
5. Prioritize Contract Management
Purchasing and procurement teams get a lot of attention when negotiating contracts. But often the potential savings they fought so hard for are never fully realized.
The reasons for this oversight might be that terms were never fully communicated to receiving or accounting. In too many instances, the contract is filed away and forgotten. If your business has trouble locating contracts, you can be sure you are not effectively managing them.
A growing trend is to move contract management away from legal and accounting and into the supply management chain. This gives your supply chain leader a more effective way to leverage opportunities for cost reduction.
6. Document and Regularly Review Policy and Procedures
Seek to create policies and procedures that are not overly complex and easy for employees to understand. It’s more likely that a 2 page document will get read than a 10 page document.
Likewise keeping policies and procedures short and sweet makes them easier to review annually for accuracy and needed updates. Your objective should be efficient policies that minimize risks, such as fraud and theft, while focusing on quality.
7. Implement Just-In-Time Inventory
Another reason Amazon has been able to dominate their field is with just-in-time or only-needed inventory. Implementing a system like this reduces overstocking and lowers warehouse costs.
It also keeps stocked in the parts you need by ordering a part when you use a part. Just-in-time inventories keeps companies agile and quick to respond to changes. This is a must in industries with quickly shifting trends.
8. Hire The Best People You Can, and When You Can’t, Outsource
People are the backbone of any supply chain. Hire the best quality people you can find and invest in their ongoing education and training. You will need specialists in your industry to understand and know how to take advantage of market trends.
Procurement generalists have a role to play the business, but you also need specialists in categories like logistics and distribution. If you are unable to directly hire specialists, don’t be afraid to look to consultants to fill a short term gap on your team. Consultant can also lend expertise when you are looking to update stagnated processes by providing a fresh pair of eyes.
9. Understand the Difference Between Supply Chain and Corporate Strategies
Corporate strategies include attracting new customers, R&D and customer service. Supply Chain strategies include selecting suppliers, storing merchandise and shipping. Often businesses overlap these two teams in a way that is not helpful.
Likewise, some businesses build a wall between supply chain and corporate teams. Understand that communication and teamwork between these two teams is critical for your company to perform at its best and realize the best possible profits.
10. A to Z Visibility and Transparency
Consumers today care about where their products come from. They will pay a little more for products that we created in a way that is beneficial to the company’s employees, or that donate a portion of profits to charity.
In addition to consumers, your managers need to understand the supply chain from beginning to end. They need data, so that they can quickly make decisions based on what they know, rather than what they think they know.