5 Tips For Optimizing Your Supply Chain Management
Supply chains are the lifeblood of businesses in many industries, but supply chain management (SCM) can be a major challenge. Eighty-three percent of manufacturers experienced problems with suppliers failing to deliver required good and services on time in 2016, the American Society for Quality’s 2017 Manufacturing Outlook Survey says. One in three anticipates supply chain problems this year.
Some supply chain problems are unavoidable, but many can be prevented by strategic supply chain management. Here are five supply chain management tips to help you keep your stream of products and profits flowing.
Map Out Your Supply Chain Process
Mapping out the steps in your supply chain process is the foundation of a systematic approach to supply chain management. A comprehensive approach to the supply chain process should include five stages:
1. Developing a strategic plan focused on meeting the demands of customers while yielding maximum profits; this step involves developing a set of metrics to set goals and measure success.
2. Sourcing raw materials, which includes developing a pricing, delivery and payment procedures.
3. Manufacturing, which includes production, testing, packaging and preparation for shipment.
4. Delivery, which includes coordinating order receipts, developing a network of warehouses and pick carriers, and implementing an invoicing system.
5. Handling returns, which includes both receiving returns and handling customer service.
Developing standard operating procedures for each of these steps will help you keep your supply chain manageable. Review your procedures to see which ones can be combined or eliminated for efficiency. Document your procedures for reference and training purposes.
Set Measurable Goals
As indicated, the first step in implementing supply chain management focuses on developing metrics to measure progress towards goals. Selecting these goals carefully and making sure they are measurable will help you track your performance and make effective adjustments.
One of the most fundamental numbers monitor to is perfect order measurement, which tracks the percentage of orders that are fulfilled without error, a vital stat for evaluating the success of your supply chain. Cash-to-cash cycle time tracks the time between your payments for materials and your receipt of sales revenue, crucial for maintaining your cash flow. Customer order cycle times tracks the time between your receipt of a purchase order and the time the order is delivered, which has a direct impact on your turnaround time, productivity and customer satisfaction levels. Simplicable identifies a dozen key metrics that can be tracked for effective supply chain management.
Use SCM Software
Once you have your processes mapped out and translated into measurable metrics, you’re in a position to gain maximum benefit from automation by adopting SCM software. An SCM solution can help you automate processes such as calculating shipping costs, creating invoices, printing labels and updating your inventory. SCM tools also include analytics capabilities that can help you take proactive measures, such as adjusting inventory to projected demand levels, optimizing pick paths or optimizing shipment scheduling.
Integrate Your Data
To make the most of your SCM software, integrate your supply chain data with other relevant data and software systems from your company. Your supply chain data typically overlaps with other data your company collects, such as customer relationship management data, transaction data, and inventory data. Integrating this data can help you streamline your supply chain, advises the Chartered Institute of Procurement & Supply. Leading SCM solutions are designed to integrate with leading accounting solutions such as QuickBooks Online, which can then serve as a platform for integrating other relevant financial, customer and inventory data. This can help you eliminate duplicate data entry processes, saving you significant time and labor.
Adjust Supply to Demand
One purpose of adopting an SCM solution is to enable you to forecast projected demand so you can adjust your inventory levels accordingly. You can make these adjustments more easily to the extent you can find vendors who are willing to ship on demand in the quantities you need. Suppliers that use production processes such as 3-D printing tend to be more flexible in this respect. For instance, o-ring supplier Apple Rubber uses 3-D printing for production and is able to offer clients customized products in whatever quantities they require. In cases where suppliers do not allow this option, relying on analytics tools will help you forecast demand more accurately so that you are prepared for peak demand seasons such as holidays.