One of the things that play a crucial role in the success of a business is supply chain management (SCM). There’s no denying that it’s the lifeline of many enterprises, regardless of size, especially those that operate in the eCommerce industry. This is because it directly or indirectly affects business owners, including manufacturers, distributors, and retailers.
An increase in operational efficiency, cost reduction, and improved overall performance of a business are some of the benefits of effective supply chain management. However, the supply chain traits and strategies that worked for you in the past might not be what you need at present or in the near future.
So, the big question is, what are today’s best practices for optimized supply chain management? For an efficient business, you should know the answer to this question first before enrolling in eCommerce courses, like those offered by Anton Kraly. Fortunately, this blog walks you through some of the best supply chain optimization practices. Read on below to learn more.
Many businesses try to do everything by themselves. However, most of them often end up harming themselves as a result of their in-house team getting overworked. An exhausted team will impact the supply chain process. That’s why companies with optimized supply chain management outsource certain aspects of their business processes. By having someone else (third-party experts or professionals) handle procurement and logistics, among other things, it'll streamline their supply chain and put themselves on an optimal path for success.
Supporting a company’s supply chain team is still one of the proven ways to optimize supply chain management, even if you already outsourced some of the activities involved in the process.
Businesses with successful supply chain management support their teams by doing the following:
• Automating communication to allow team members to communicate more efficiently. As a result, incidents that promote negativity within the group, such as misunderstandings, are avoided.
• Meeting with their team members regularly to streamline preparations for upcoming logistical situations or resolve existing issues.
• Others go the extra mile by compensating their best-performing employees.
• Putting a spotlight on employee development by assessing employees regularly and investing in training and other skills enhancement activities. They also rotate the most promising team members through multiple job assignments. To continually supply the best people to higher-level supply chain positions, companies that found success in managing their supply chains also spend time developing succession plans.
Providing the necessary support to your supply chain team would translate to more efficient handling of production, purchasing, contract management, among other activities in the supply chain. It would also mean that your team members know how to identify issues in the supply chain and quickly come up with the best solutions.
The supply chain is crucial to bringing a product to the market successfully. However, it’s just one ingredient in the pie. It's still essential to keep in touch with your cross-functional colleagues and develop your professional and personal relationships with them whether you’re doing procurement, production control, or any other processes.
Here’s how you can improve your relationships with colleagues and partners:
• Communicating well with your supplier or manufacturer is one of the most crucial aspects of supply chain optimization. Good, transparent communication ensures that any confusion is avoided and demands are fulfilled on time. Establishing good communication is especially vital for businesses that work with more than one supplier.
• Establishing the expected flow of information or communication chain is, of course, part of communicating well with suppliers, manufacturers, and even employees or team members. The chain of communication ensures that all members know what to do when they receive a message. The established information flow also means that everyone who plays a role in the supply chain understands how messages should be delivered. Not only that, but they also know what should be forwarded and who should receive which message.
• Meeting with stakeholders and suppliers regularly (weekly, for instance) lets everyone highlight and tackle worries and concerns as they occur. Regular meet-ups also allow business owners to assess how they can further improve their relationships from all sides.
The better your relationship with your colleagues and partners, the stronger your supply chain will be.
Supply chain management is a complex process. That’s why to improve efficiency, successful companies implement a quality project plan.
The correct plan helps create some guarantee of success in the supply chain by doing the following:
• Supporting the company in complex strategic investment areas
• Serving as support in strategy development
• Reduction of all kinds of risks
• Contributing to the overall improvement of the project
A comprehensive management plan should specifically outline the strategies to be used for the following areas:
• Product Quality Inspection: It’s important to verify that the products you’re getting meet high standards, which can be done through quality inspections. It’s in these inspections where a purchasing agreement comes in and becomes so handy. The things agreed upon with a vendor will define the tolerances that your company would allow for the product to be inspected. This means that any item found to possess characteristics outside what’s agreed upon can be returned to the vendor.
Simply put, product quality inspections ensure that every product you receive can be useful in the supply chain process and for the end-users.
• Risk Management: Companies with successful supply chain management classify suppliers by risk. They do it so they can prioritize audit activities accordingly. Quality audits are essential to ensure that suppliers have adequate quality measures and controls. They also help identify quality issues, gaps, and supply chain optimization opportunities. If you want to avoid scammers, audits can also help. In addition, fortunately, there are now more than one website you can check over the internet for online scam reports and exposés.
A risk management plan classifies suppliers into two types: high-risk and low-risk. High-risk suppliers require more audits than lower-risk ones. Once assessment, risk classification, and audit have been made, companies should then work with suppliers to address identified issues.
• Price Negotiation: Getting the best rates possible is also an essential aspect of supply chain management. Enterprises with optimized supply chain management know about this, which is why they have strategies for negotiating prices with suppliers. It’s something that you should take every opportunity to do, considering that the optimization process’s ultimate goal is to reduce costs to improve profit margins.
Businesses with optimized supply chain management have different departments that work cohesively as a single unit. They use centralized management software to make it possible. The right software can help all the facets of your business work together effectively, such as your inventory, finance, and sales teams.
All of your different departments also have access to relevant data made available by the system in a centralized database. This means that management software can also serve as a tool for analyzing all available information that’ll help you understand your processes, market, and customers better. Of course, data analysis is crucial, especially when making pivotal business decisions.
Indeed, technology can help grow a business. Therefore, if you want to streamline your supply chain process, do your homework and pick management software that best fits your needs.
Companies that have optimized their supply chains successfully also automate where it counts. It’s no secret that automation can improve efficiency.
However, make sure to discuss with your teams, colleagues, and partners whether automation should be implemented in your business. Consider both your goals at present and in the future. Note that automated supply chain processes require additional skills from your teams, managers, and even suppliers.
Adopting an automation model for your supply chain requires significant preparations that may slightly complicate the management process. But, if done correctly, there's no doubt that it can revolutionize the supply chain of your business.
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A stronger and more efficient supply chain can help a business achieve better inventory management, shorter processing time, and quicker delivery time. If your own supply chain isn’t helping you enjoy those things yet, and still doesn’t provide better revenues to your company, then your management is in urgent need of a facelift.
By putting everything mentioned and discussed above in practice, you can have a more optimized supply chain that can unequivocally strive in today’s increasingly competitive business world.
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