7 Tips on Improving Supply Chain Management
An efficient, effective, and responsive supply chain is essential for staying on top of your competition and achieving organizational goals. However, optimizing the supply chain and maintaining agility can be challenging in complex supply chains with multi-dimensional actors participating in product sourcing, transportation, and distribution. Businesses need to review strategies, improve business functions, and implement futuristic technologies to improve supply chain agility and maintain a good balance between supply and demand.
Due to the recent surge in inflation and the devastating effect of the pandemic in New Zealand, supply chains have faced major disruptions. Businesses in New Zealand had to revise their supply chain strategies amid an overall spike in the costs of raw material acquisition, logistics and transport, and energy. These unprecedented conditions have highlighted New Zealand’s precarious position in the global supply chain, and businesses must improvise methodologies to improve supply chain management. If your business is struggling to maintain efficiency and responsiveness in supply chain management, here are 7 effective tips to improve it:
Gather Real-Time Data from Downstream Supply Chain
To achieve agility in a supply chain, businesses require obtaining updated data on market trends, product sales, and customer orientation. For this purpose, they need to gather real-time sales and inventory data from the downstream supply chain. The internet of things (IoT) and integrated supply chain management systems have enabled businesses to acquire minute-to-minute information from downstream supply chain partners.
Point-of-sale systems send rapid transaction data related to product sales and inventory to respective businesses. A quality POS solution makes it easier for retailers to collaborate with supply chain partners. Look up POS hardware solutions NZ, and you’ll come across Element™, one of the leading vendors in New Zealand. Their POS systems use cutting-edge technology to deliver information and assistance to customers and allow seamless sales transactions on checkout counters. POS devices are connected to central inventory and sales systems of retail outlets in specific regions. Using this information, businesses can instantly gather data related to consumer buying behavior and replenishment levels at retail outlets. This will help them forecast production, sales, and transportation cycles and improve overall supply chain management.
Increase Operational Visibility
Operational visibility refers to an organization’s ability to comprehensively monitor and understand how its core business operations are being carried out. The more a business monitors its core business function, the more operational visibility it acquires. Enhanced operational visibility paved the way for improved supply chain management.
There are certain steps a business can take to improve its operational visibility. These steps include using business intelligence and analytical tools to interpret heaps of data coming in through IoT and integrated SCM systems and create meaningful information to provide decision-makers with better insights into product performance, business outcomes, changes in market trends, and operational costs. These technologies can give businesses a better understanding of the supply chain’s strengths and constraints and identify shifting market trends that will assist them in making better strategic decisions.
Optimize Distribution Network
The distribution network plays an important role in overall supply chain agility and product availability. Optimizing distribution networks can help businesses greatly reduce transportation and operational costs, increase product availability, improve supply chain agility, optimize inventory, and carry out multi-channel deliveries by segmenting customer orders.
Instead of opting for vertical growth in a distribution network that emphasizes increasing layers of distribution, it’s always a better approach to expand your distribution network horizontally by introducing remote warehouses or stock-keeping units (SKU), increasing the number of distributors, and optimizing distribution logistics. This can be done by analyzing the existing distribution network, examining distribution channels, and identifying supply chain vulnerabilities. Optimizing your distribution network provides you with more control over your supply chain and improves both responsiveness and efficiency in the overall supply chain.
Reduce Operational Costs
Overhead costs involved in acquiring raw materials, outsourcing semi-finished materials, manufacturing, and distributing products can significantly increase operational costs. Moreover, not choosing the right supplier for sourcing the right product may cause a deterioration in the finished product’s quality, production delays, and major downstream supply chain disruptions.
Cutback techniques in the supply chain focus on identifying operational inefficiencies and establishing efficient and cost-effective ways to source items, store raw and finished product inventory, and ensure customer satisfaction. Businesses must use the right technology tools to streamline the entire upstream (suppliers, logistics, warehousing) and downstream (distribution network) and eliminate workflow inefficiencies like slow-moving inventories, demand and production disparities, complex supply chain network designs, and dubious supply chain strategies.
Outsourcing major supply chain management processes like warehousing and transportation can also help businesses reduce operational costs and increase supply chain flexibility and adaptability.
Leverage Supply Chain Analytics
Supply chain analytics has revolutionized the manufacturing industry with its futuristic approach to forecasting demand and supply and interpreting complex raw data coming in from distribution channels, customers, and point-of-sale systems. Businesses can have a greater insight into overall supply chain management and product performance by using business intelligence and big data analytics. Business intelligence has allowed businesses to implement the concept of just-in-time inventory in its true spirit.
Real-time data analytics can help businesses track their performance and compare it with strategic plans to evaluate its efficacy. These intelligent systems can help businesses simulate what-if scenarios and predict the outcomes of these scenarios on short-term and long-term supply chain objectives. Implementing supply chain analytics can help businesses increase supply chain efficacy and become more responsive to changing market trends.
Prioritize Supplier Relations
Supplier and customer relations are equally important for businesses to improve supply chain management. Maintaining healthy supplier relationships is imperative for businesses as the entire downstream depends on strong supplier-business collaboration. Form strategies to maintain cohesion and enhance collaboration with your suppliers. Focus on maintaining conflict resolution and set measurable goals for evaluating supplier performance. Build strategies to enhance communication with your suppliers and maximize efficiency during demanding situations.
Integrated Supply Chain Management Increases Agility
Supply chain integration refers to implementing technology to exchange real-time information with all parties involved in a supply chain. A single system or multiple sub-systems able to communicate with each other helps businesses attain superior performance and increased agility.
Through supply chain integration, businesses can make essential information transparent to all supply chain entities, from suppliers to customers. This will help businesses make the right decision at the right time during sourcing, product design, manufacturing, and distribution. To successfully integrate SCM systems, businesses must set key performance indicators, implement IoT networks, automate major internal and external business processes, and use analytical tools to improve predictive and prescriptive insights.
Final Thoughts
As technology continues to permeate global supply chains, businesses should re-consider their existing strategies and focus on improving overall supply chain management. Improving the supply chain’s efficiency, responsiveness, and efficacy requires cohesion and collaboration between all parties involved. Gaining more insight into the supply chain, utilizing intelligent tools, and developing smart strategies to instill efficiency and productivity in both upstream ad downstream supply chains can put your organization on track to achieve short-term and long-term goals and gain a competitive edge over your rivals.