Seven Supply Chain Best Practices to Optimize Continuity
While there is no such thing as a “perfect” supply chain, effective supply chain management can lead to efficiency, which is important for a company’s financial bottom line. These seven best practices of supply chain management will help decrease costs, shorten production times, and drive revenue.
Limit Excess Inventory
While having an ample amount of inventory might be viewed as a proactive plan while managing a supply chain, it is actually more advantageous to limit a company’s inventory. If you have inventory in stock, it means that it isn’t being sold, and you’re not making money on the goods being sold, meaning the cost of hanging on to excess inventory can be huge. It is also taking up space that could be occupied by other goods that could be sold. In order to maintain an efficient supply chain, consider limiting on-hand inventory, when feasible.
Consolidate the Supply Chain, When Possible
The ideal supply chain is one that is efficient in addition to being profitable. When optimizing a supply chain, it is important to examine the links to see if they can be consolidated to operate in a more effective manner. The sooner you can acquire supplies, the sooner they can be produced, and move along the chain. Sometimes, redundant or unnecessary links need to be eliminated to maximize the productivity of a supply chain.
Supply chain management has long been a technology-averse industry. Logistics have been managed with pencil and paper and basic spreadsheets. In recent years, however, advances in technology, including automation and proprietary software, have made managing a supply chain easier than ever. While it may seem daunting at first to teach an old dog new tricks, these improvements in technology can make supply chains operate at far more efficient levels.
Anticipate Consumer Demand
If a company can anticipate a customer’s next move, they will have a leg up on the competition, causing positive cash flow, sooner, which can result in a more efficient supply chain. Studying metrics, including consumer trends, price indices, and seasonality of purchased goods, allows a supply chain manager to better anticipate what a buyer is looking for in advance, being proactive rather than reactive. Supply chain forecasting is key to achieve optimization.
Identify Risks in the Supply Chain
Anything from oil prices to political events, weather, bankruptcy, and more can disrupt a supply chain while doing business with organizations around the world. By identifying risks in the supply chain, a company can better defend against an interruption in the supply chain, which could decrease productivity.
In order to be successful, not just in supply chain management, but in business in general, forming meaningful relationships is key to a successful operation. By forming relationships with suppliers, shippers, and other links along a supply chain, a company is more likely to have a partner who’s willing to help them with issues that arise along the chain. This will keep the supply chain running in an efficient manner.
Consistently Evaluate Your Supply Chain
The best supply chain is one that is consistently evaluated to ensure that it’s reaching its optimal potential. Constantly examine the links along the chain to see if they are working for the overall bottom line. Is it possible to secure supplies from another supplier for less money than a company is currently paying? Can they save money on shipping by using a different container? These are all things to consider when evaluating a supply chain.
Do you think you have what it takes to manage a supply chain in an effective manner using these seven proven strategies? Click here to get started learning more about a Nexterus franchise!