High-volume growth is essential to the success of a business. Poorly managed high-volume growth potentially damages a business to the point of failure, however. Running out of inventory is a nightmare scenario for businesses today but solutions are available to prevent this dilemma.
Managing your supply chain is a necessary part of operating a successful enterprise. Supply chain management (SCM) involves multiple factors and solutions, all designed to avoid delays and minimize various errors. Read ahead for an informative guide on managing a supply chain effectively.
Supply Chains 101
If the primary goal of your business is to get products into the hands of your customers, then your supply chain is a vital component of achieving this goal. A supply chain is a fundamental network established between a business and its suppliers, designed to both produce and then distribute products to a final buyer. Essentially, a supply chain is comprised of the entire process of manufacturing through selling commercial goods and products. Between the manufacturing and selling aspects of the supply chain exist multiple other elements such as activities, personnel, enterprises, data, and a vast number of resources.
Supply chains are created to get products into the hands of customers quickly. Supply chains are also created to reduce costs (via efficiency and automated processes) and maintain a competitive edge in your applicable industry (because competing businesses are assuredly doing the same thing). Therefore, managing your supply chain effectively is not only important - it is integral to the success or failure of your daily operations and business overall.
What is Supply Chain Management?
Supply chain management (SCM) consists of three important elements. To understand these elements, it is necessary to first understand the fundamental concept of SCM. Managing a supply chain is like managing other businesses or aspects of a business. The primary purpose is to manage the operation with the goal of creating the most efficient, positive, productive and profitable end-result scenario possible. Directly pursuant to supply chains, success requires eliminating delays, fluid communication, real-time information exchanges and the meeting (and hopefully exceeding) of customer expectations.
The three important elements pursuant to supply chain management include demand, materials, and capacity of resources. The goal of SCM is to improve the speed of cash flow via the flawless synchronization of all applicable business processes. A supply chain includes management indexes, item flow (throughput), optimization of expense aiming and inventory management. Essentially, another way to think of SCM is “cash flow management.”
Understanding the Vital Importance of Effective Supply Chain Management
The primary reason a supply chain is so important is because it allows your customers to quickly receive the products they want from your business. An effective supply chain provides your business constant access to those products without delays. Despite the multiple important aspects and components involved in the supply chain process, the element with the most importance still involves the satisfaction of your customer or client base. This includes your core, repeat customers as well as new customers considering your business and products for the first time. Ultimately, if your supply chain falls, so too will aspects or the entirety of your business. Established customers will not remain loyal if the products they want, and order are consistently unavailable. Potential new customers will also turn to another business, which does have an effective supply chain process and is able to supply the desired products without delay.
Supply chains also deal with the product returns process. Why is this important? A revealing statistic was brought to the public’s attention at a recent NRF (Retail’s Big Show). Research discovered how seventy-one percent of established customers are likely to remain loyal to a business even after a product return - if the return process was handled in a manner satisfactory to the customer. Effective supply chains management also helps:
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Avoid shipping delays.
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Minimize logistical and human errors.
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Improve negotiating power pursuant to lower supplier rates and product delivery times.
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Overall planning, productivity, and efficiency of your business.
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Improve communication with customers and the ability to accurately set their expectations.
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Reduce the costs of doing business (savings which can be passed on to customers).
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Improve product sourcing.
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Assist with product development.
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Maintain a competitive edge.
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Mitigate risks.
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Coordinate communications between manufacturing, warehouse, transportation, inventory management and order fulfillment departments.
Tips for Effectively Managing a Supply Chain
The first step to creating an effective, powerful, and profitable supply chain is to establish a supply chain management council. Every successful business has a team of credible leaders in vital positions. A supply chain management council will create a potent strategy for not only developing better efficiency over time - but beginning with it. Hire leaders who either have proven experience successfully managing supply chains or visionary perspectives about how to improve yours. Balance the visionaries with the experienced leaders to create a potently effective balance within your leadership team.
Ensure Your Supply Chain Departments has Adequate Staffing
Outside poor financial planning, nothing else derails the efficiency of a supply chain than and understaffed department struggling to make ends meet. Those ends might include shipping deadlines. They might also include staying inside a budget or staff members over-exerting themselves or their allotted resources to avoid costly mistakes (a process which ultimately leads to those very same mistakes in the end). Proper management of labor hours is of course also vital to running a successful, profitable business. This does not always mean reducing labor hours, especially in supply chain-related departments vital to customer satisfaction and therefore the success of your entire operation.
Finding the Right Suppliers
Cost is not the most important factor when choosing your suppliers. Simply put: You are best served by first finding the suppliers that are the best and most reliable at what they do. Make a list of several preferred choices. Negotiate pricing with the suppliers on your short-list to get the best deals. Remember, if your supply chain fails so does your business.
Utilize Top Supply Chain Management Software and Tools (and additional tips)
SCM software and tools help automate the processes involved in your supply chain, improving efficiency, and eliminating many potential human errors. Top SCM programs and software companies such as Syncrofy, Intelex, Oracle and Smart IP&O all help manage your supply chain to operate at its strongest potential. Additional tips to effectively manage your supply chain include:
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Provide proper employee training.
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Learn and use all available latest technology.
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Improve your returns management operations.
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Maintain positive, transparent, and healthy supplier relationships.
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Prioritize total cost-of-ownership over cost.
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Frequently optimize your inventory.
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Conduct regular reviews and schedule quarterly “ideas meetings” to reduce risks and increase efficiency.
Searching Online for Access to Reliable Supply Chain Guidelines? These Top-6 Supply Chain Guideline Sites Are Perfect for You.
Effective supply chain management requires experience, skill, and a flexible willingness to expand your perspective. Accomplishing this also requires a balance. For example, as experienced as you and your team are, you might need to research and consult with outside resources to procure the best possible results for your company. Please find below a list of popular and reliable links to the top-6 online supply chain guidelines and resources, which might prove to be of benefit to you and your company today:
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The Association for Supply Chain Management (ASCM).
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Supply Chain Management Review (SCMR).
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Supply Chain Trend (although a blog, Niels Van Hove is a supply chain expert who has been successfully managing supply chains and assisting businesses improve theirs for over two decades combined).