3 Tips for Creating Effective Supply Chains
As business owners, when we talk about supply chains, we mean everything, from raw material sourcing to getting our products into the hands of consumers. We are always
looking for ways to create effective supply chains from the ground up. This means we hope to be able to move our products more quickly and make the process cheaper.
Overall, we want to make the long journey from raw material suppliers, through us, and to our customers easier. The better and more reliable we can make our supply chains, the happier our customers will be. If we are able to keep our customers satisfied, they are more likely to become repeat customers who we can depend on for years to come.
Supply Chain Analytics
To create a more effective supply chain we need to understand our current setup inside and out. This knowledge often comes from supply chain analytics and can look like a number of processes. In simple terms, we typically are referring to analyzing the data we get from our various applications. This might include the data from our order
management software, fulfillment databases, and procurement resources. An analysis is important so that we can take data and turn it into actual improvements to our supply chain. The better our analysis the more likely we can give customers accurate information and not have to communicate multiple changes to an order. Our customers are depending on our products and don’t want to hear it will take an extended period to get what they need. If our supply chain is not quick enough many of our customers will turn to our competitors.
Even once we have run analytics on our supply chain and understand it to the best of our abilities, we still need to leverage other resources. For example, partnerships for inventory management, pick & pack, shipping, or returns can allow us to focus on making our product and not spend all our limited time on managing our supply chain
The challenge is managing these relationships takes time and energy too. Sometimes we do not feel like we have the capability to build these relationships ourselves. In these cases, it is great to work with a logistics consulting firm in order to make sure all our contracts are working for us and not against us.
These consultants can help us find ways to lower our costs or be able to speed up our processes. They can help us with everything from getting deals on the raw materials we buy in bulk to providing affordable two-day shipping to our customers.
Once we have analyzed our supply chains and created great partnerships, we need to focus on being adaptable. This means continually balancing supply and demand while identifying and responding to deviations or disruptions at the same time. It is important to know how shortages of raw materials will impact us as well as if we need to raise our prices if there is a temporary shipping cost increase. This also means we sometimes must have different strategies for different products.
Our strategies must balance responsiveness and efficiency. For example, for high-margin items, we might lean towards responsiveness and replenishment based on actual sales. On the other hand, for low-volatility, low-volume, low-margin products we might focus on the efficiency of our supply chain and always send the same number of products to the same stores at the same time of the month. Being adaptable means we need to always stay on top of our supply chains and know what changes could mean for our company.
As we all know our supply chains are complex and can involve several complex moving parts. Supply chains can cause major headaches if we do not manage them well. We don’t want to lose sales because we can’t get the raw materials we need. Nor do we want to lose customers because we can’t get our products into their stores. Having an effective supply chain involves analytics, leveraging others, and being adaptable. While managing supply chains can be a challenge we must put in the time to do so if we want to be able to be a successful business that thrives and has loyal customers.