Managing your supply chain is one thing, but optimizing it is a whole different challenge and one that many companies fail at doing. To help you succeed, we have put together six fundamental cornerstones that you should emphasize when planning your supply chain.
1. Transparency
Coming in at the top of the list is transparency. Essential to control costs and define expectations, it establishes trust between all parties. With time, it becomes a powerful tool for operating in a lean and highly productive manner.
2. Prevention/ Risk Management
Regardless of whether it is domestic or international, supply chains are growing more fragile. Not having a risk management process in place can mean complete supply chain failure leading to significant and costly disruptions. You must understand the capabilities of your suppliers, their strengths and weaknesses, and have contingency plans in place for the latter.
3. Contracts and Audits
Even seemingly straightforward supply chains can become highly convoluted, resulting in unexpected fees and smaller profit margins. An audit process including invoice reconciliations, evaluation of freight costs, and vendor contracts is imperative in improving your supply chain management. Without a strong understanding of your contracts and regular assessments of your statements of accounts, your supply chain is undoubtedly operating inefficiently.
4. Technology
Playing a leading role in our first tip, “Transparency,” technology or the lack thereof can make or break your supply chain. When partnering with vendors, ensure they can provide you with real-time updates, customized reports, and EDI capabilities. Investments in your company’s technology and employing vendors with advanced information systems ensure better inventory management, increased production control, and more effective order tracking and delivery. Not to mention improved productivity.
5. Teamwork
Building productive relationships with distributors, suppliers, and operators will propel you to the best results. A knowledgeable and mutually beneficial collaboration among the executors of the supply chain will provide a strong foundation capable of managing the often turbulent logistics sector. As is the case with most relationships, communication is vital. Proactive communication will lead to mitigation of risks, effective management of supply chain disruptions, and cost control.
6. Understanding with whom the responsibility lies
Our last tip is often overlooked, and when it is, it results in large sums of displaced costs falling square in the buyer’s lap. Responsibilities of charges such as freight forwarding fees, customs clearance fees, and port-induced surcharges are determined at the time of procurement. Suppose the procuring party is unfamiliar with the terms of sale or overlooks the fine print. In that case, they could be, unbeknownst to them, increasing their cost of goods exponentially, thereby shrinking what is too frequently a thin margin.
If you need help optimizing your supply chain, our consultants can help. For more information or to speak with one of our supply chain professionals, fill out the form below: