Making sure the product gets to the customer as soon as possible while offering that product at a good price is more often than otherwise a company objective that is at the top of the list. To this end, good supply chain management is crucial to any manufacturing firm. Supply chain management can be broadly defined as “the management of the flow of goods and services and includes all processes that transform raw materials into final products.” While reducing costs and staying on time are generally seen as the tenets of a well-oiled supply chain, a few other factors are worth examining when planning it thoroughly. Notably, data collection, route optimization, warehousing, employee training and risk management are frequently cited as important aspects to consider when planning a company’s supply chain.
Accurate data is essential to establishing control over the different processes in a supply chain. Decisions can only be taken by using up-to-date data, as old data will incur mistakes. Gaining access to real-time data is the industry standard nowadays, with technological advances allowing firms to implant systems that monitor the flow of goods every step of the supply chain. Supply chain management software, such as SAP, is most often used to eliminate the risk of human error and automate many data entry tasks. Software paired with digital tools used in warehouses and distribution centers to scan products entering and leaving a location gives a company the power to log everything that is happening. This aids decision-makers when they are confronted with delays or cost overruns since they can identify the problems at the root of these issues more easily.
Optimizing routes and warehousing
Big Tech companies like Uber or Lyft are not the only ones that can use optimization software to reduce route distances in delivering their product. More traditional manufacturing firms can now purchase access to fairly affordable programs that minimize transportation costs along the different steps of their supply chains. In an increasingly global economy, companies are having to deliver goods across the world using different modes of transportation. Optimizing the costs associated with those modes of transportation is a key factor in getting a competitive advantage and gaining market share. Further, optimization software can allow companies to maximize their physical storage and avoid overspending on unused space. Interesting supply chain solutions such as cross-docking can also be charted accurately using software.
Technological advances are important in ensuring better supply chain management. However, without competent employees that operate the different processes of the supply chain, such advancements are tantamount to useless. Employees have to know what they’re doing! Offering specialized training to employees plays a key part in making sure that their skills are up to scratch with the changes in the supply chain. Another part of maintaining a well-trained staff is retaining workers that have experience. Training programs are important in teaching employees new skills, but many skills are only developed over several years. Day-to-day cost reduction strategies are often the product of people who have spent years understanding the specificities of a supply chain, from knowing the time it takes to unload a truck with a new product to the differences between two types of stretch wrap.
The biggest threat to a good supply chain is an unplanned event. Work accidents, customs delays, changes in costs or even political events can all have an impact on a company’s supply chain. It is primordial to plan for these events to avoid complete disruption of operations. A risk mitigation plan can come in handy to try to predict what risks are most likely to occur, and how the firm can quickly resolve the issues caused by the occurrence. Ways to mitigate supply chain risks include dealing with several different suppliers, planning more than one shipping route, having resources to fast-track paperwork in case there’s a hiccup in a foreign country.
The road ahead
Supply chain management is an area of expertise that is changing at a very fast pace. The rise of artificial intelligence and increasingly responsive monitoring software means the automation of all supply chain processes is not too far ahead. Implementing the different strategies mentioned above is the first step in that direction.