If you run any type of business that must ship a lot of materials or products, you know that the amount you spend in this area can greatly impact your venture’s bottom line. Additionally, if you have holdups and headaches in the logistics arena, this can lead to multiple issues that make a significant dent.
One way to reduce the likelihood of overspending on shipping and having too many problems in that area of operations is to continually keep an eye out for weaknesses in the supply chain and consider ways to address them.
Lack of Data Visibility
These days, data is one of the biggest resources all entrepreneurs can utilize to run their operations and build better businesses. If you don’t have enough data visibility in your supply chain, this can cause issues and stop you from streamlining processes, being more efficient, and cutting costs. The more information you have to go on, the better you can improve your supply chain and reduce risk.
You want to try to utilize all sorts of details within your supply chain. For example, it pays to use RFID tags to track assets at each point along with the packing and delivery pipeline and a quality impact indicator or temperature indicator if you move goods that are potentially hazardous or need to be kept steady or at certain temperatures to stay viable.
You need to know cycle times for things such as how long it takes to go from stock requests to approval, approval to purchase order, invoicing to delivery, etc. Track the consolidation of items and vendors to make managing your supply chain quicker, easier, and more cost-effective, too. Plus, use on-time delivery reporting to understand which orders are outstanding at any point in time from both payment and delivery perspectives.
There are numerous other factors to watch, so make a list of all the different touchpoints and costs involved in your supply chain to come up with a schedule of things to track and analyze regularly. Utilize tech tools to help you with many of these tasks, too, since they can help you increase productivity by automating and streamlining tasks.
The Wrong Supply Chain Partners
As you take a good hard look at information over the months ahead, you may discover that one of the weaknesses in your supply chain is that you have the wrong partners to begin with. Think about the potential risks that various supply chain partners post to your business, whether shippers, software vendors, product suppliers like wholesalers, manufacturers, or others.
To properly assess the businesses you deal with, transparency is vital. Ask third parties to provide you with details such as their cybersecurity measures and vulnerability assessments, emergency management plans, data back-ups, and more. Also, don’t forget to regularly assess outcomes from the partners you use, such as what percentage of deliveries arrive on time and intact or how often systems crash. If you notice that you’re having frequent issues with a company, it’s well worth looking for a replacement partner.
Also, you’ll have weakness in your supply chain if you rely too much on a single provider. If you only have one logistics firm you trust to deliver products to or for you, and they go bust, or their staff goes on strike, or some other big issue arises, you’re going to be in trouble. The same goes if you rely on only one manufacturer or wholesaler to make or provide goods for you. Look at ways you can comfortably diversify to reduce risk.
Also read: Best Logistics and Supply Chain Management Tips
Reacting to Issues Rather than Proactively Planning for and Minimizing Them
Many business owners and managers are so busy running their operations that they chase their tails and react to problems rather than proactively planning for and minimizing them. This is often the case in the area of the supply chain, in particular, and can be another weakness to work on.
Innovation and disruption are the norms in most industries now, so if you want to keep your venture at the top of the game, you need to anticipate potential changes and look ahead at what might be coming and how you need to update your supply chain in turn. Implementing IT systems to best utilize data will help you keep a competitive edge, as will building in redundancies to make it easier for different systems in your supply chain to respond to unanticipated events ASAP.
Also, talk to all your team and external third parties about potential issues they see developing that you could address now rather than later. Regular communication across departments and with employees and contractors and other companies can alert you to things that you can plan for and minimize the risks before they stop your supply chain in its tracks or create costly errors.
You’re never going to have a perfect supply chain, but you can definitely keep making improvements over time and reduce headaches, holdups, and expenses. Supply chains are complex and interconnected and often serve as the backbone of your operations, so don’t neglect this area of your organization.
