As industries expand and connections grow increasingly closer, competition between companies is at a record high. At the heart of this competitive market is effective supply chain management. The global supply chain market value is $15.85 billion, and its CAGR is expected to grow 11.2% from 2020 to 2027.
Historically, supply chain management was concerned with moving goods from point A to point B, whereas today’s market success relies on a highly optimized supply chain. And yet, only 6% of companies claim to have complete visibility on their supply chain.
10 Best Practices for Supply Chain Management
While supply chain optimization becomes increasingly crucial, the world around us makes these practices more challenging. 38.8% of small businesses in the U.S. faced supply chain issues and delays during the COVID-19 pandemic. We cannot always control how the supply chain is affected, but we can reduce its impact with solid supply chain management.
So, if you’re looking for ways to improve your supply chain optimization or logistics optimization, we’d like to suggest these ten best practices.
1. You Need a Supply Chain Council
One of the most essential elements of supply chain planning is to meet your company’s objectives, strategies, mission, and vision. When considering all the different aspects of supply chain logistics, keeping track of your company values can be tricky. A supply chain council is dedicated to structuring the supply chain to satisfy all the company’s needs.
Your supply chain council should be diverse to represent every aspect of the organization’s operations. Often, it should include the supply chain manager, corporate executives, department directors, and business unit heads.
While everyone else is performing crucial roles on behalf of the company, the council can dedicate its time to strategically structuring the supply chain.
2. What’s Your Supply Chain Structure?
To create your supply chain structure, you need to begin with the question: what does your company need?
Organizations can practice the centralized or decentralized methodology. The former is typically handled all in one place, with one warehouse, and decisions are made in-house by the managing authority. A decentralized supply chain allows individual aspects of the supply chain services to make their own decisions to meet their objectives. Some companies now adopt a hybrid approach.
3. Save Time by Leveraging Technology
Supply Chain Dive suggests that leveraging technology can significantly simplify complex supply chains. However, the trick is to adopt technology that meets your needs by increasing efficiency, reducing risk, and providing data-driven insights. Supply Chain Optimization Software works to streamline the process by taking on manual tasks and automating them.
Some technologies can manage data and help you make supply chain optimization decisions according to your organization’s goals. However, the wrong supply chain optimization technology that does not meet your company’s strategy can hurt you.
IT Support Los Angeles is here to help you find the right technology for your supply chain solutions.
4. Create Trusted Connections
Your partners in the supply chain process are crucial. Creating trusting, collaborative, and effective alliances will prove to be invaluable in optimizing your process. Everyone involved can make or break your supply chain, from the freight brokers to the IT Consulting Los Angeles firm.
Communication, common goals, transparency, and collaboration are vital to creating a healthy relationship with your partners. To improve your relations with your connections, create a set of measurable objectives and conflict resolution plans.
5. What Is the Total Cost of Ownership?
Many organizations are now shifting their priority to the Total Cost of Ownership (TCO) rather than just the purchase price. The total cost of ownership includes everything paid for each product or service (including direct and indirect costs), not just the acquisition cost.
Using TCO makes the data more accurate and helps supply chain managers make better decisions.
6. Source Suppliers Strategically
Try to find suppliers that share the same mind-set and objectives as your organization. Consider factors other than price. For example, a low-cost product might seem the best choice, but if it comes at a reduced quality, it might impact you later down the line and raise overall costs.
You should consider operations, training, maintenance, warehouse quality, and transport when sourcing your suppliers. You might want to delegate to a trained procurement department to ensure that your organization works with like-minded suppliers.
7. Contract Management
Move contract management to your supply chain department. When contracts are dispersed throughout the organization, things can become messy. Keeping your contract management within the supply chain department streamlines and standardizes processes. Plus, supply chain managers may be better positioned to negotiate and revise deals.
8. Optimizing the Inventory
One of the biggest problems faced by businesses is a poorly timed supply chain. If supplies are procured before manufacturers are ready for them and consumer demand is down, the organization wastes warehouse costs and storage. The goal is to complete everything to arrive just in time for the next stage without causing delays or overproducing.
Supply chain optimization relies on streamlining the inventory strategy to lower costs and improve profit.
9. Review
Supply chains aren’t stable systems that sit unchanged for years at a time. The world is constantly shifting. Competition is increasing. You need to organize regular reviews of your supply chain optimization model to ensure it is always performing as effectively and efficiently as possible.
Don’t be afraid to continuously look for better suppliers and partners or tweak your process over time. As your supply chain evolves and matures, you will be able to make more accurate data-informed decisions that can improve your supply chain optimization.
10. What Are Your Risk Levels?
Lastly, you need to analyze your risk factors and strategize your supply chain risk management. As mentioned above, many uncontrollable elements can do damage to your supply chain, such as the pandemic; your processes need to be flexible and prepared to deal with any issues that arise.
Identify your risks, mitigate as much as possible, analyze probabilities and effects, and evaluate the cost of these risks. Then, prioritize the likelihood and create a plan for how often you should monitor them.
Final Thoughts
Optimizing your supply chain may take time, however, implementing the strategies above will prove to increase the overall efficiency of your business and reduce costs.
About the Author: Brent Whitefield is the CEO of DCG Technical Solutions LLC. DCG provides specialist advice and IT Outsourcing Los Angeles area businesses need to remain competitive and productive while being sensitive to limited IT budgets. Brent has been featured in Fast Company, CNBC, Network Computing, Reuters, and Yahoo Business. He also leads SMBTN – Los Angeles, a MSP peer group that focuses on continuing education for MSP’s and IT professionals. https://www.dcgla.com was recognized among the Top 10 Fastest Growing MSPs in North America by MSP mentor.
