Pandemics, natural disasters, international conflicts – how much more can we take? The pressure on supply chains has recently exploded. Supply chain management (SCM) is now a top priority for many organisations across the globe. But how do we identify the weakest links and their root causes in a supply chain? It’s back to the basics and SCM know-how is a must.
What does supply chain management (SCM) exactly mean?
There are countless definitions for this term. In our understanding, SCM is all about synchronising the material and information flow within an organisation and with their partners to gain value for their products or services.
Many companies we’ve spoken to understand SCM as the procurement of goods and materials for production and distribution. But that’s only a small part of it. As outlined above, it’s much more detailed. You need to optimise processes within the company and beyond. In doing this, you will enhance customer service, improve efficiency, increase profit and grow revenue.
Some key elements to consider when optimising supply chain solutions include:
Business is driven by people. For this reason, good relationships in a company but also with business partners (customers, suppliers, etc.) is vital. This is one of the most overlooked elements in optimising a workplace, yet which can have one of the greatest impacts. Investing time and energy into relationships directly invests into a company’s future.
Involving business partners early
The market (existing or potential customers) is decisive for the success or failure of a product or service. You need to be on top of what your market is doing. Don’t let market ignorance be your weakest link. To develop successful products that can be manufactured efficiently, purchasing (including suppliers) as well as production and logistics should be involved in the early stages of development.
Integrated Supply Chain Planning
A key function of SCM is planning. An integrated planning process, Sales and Operations Planning (often referred to as S&OP) helps to balance demand and supply. Good results can only be achieved in a team and with modern technology.
Total cost of ownership
A product or service generates costs throughout its entire life cycle. The decisive factor is therefore not the price of a product but the total lifespan costs. Are you losing out due to excessive or unpredicted costs? This could in fact be your weakest link. But with the right optimisation, you will see a positive increase of your bottom-line profit.
SCM needs to be viewed as a cross-company process. Often the problems lie in poor risk management and unresolved issues between an organisation’s departments. Other weak points can include: an absence of information along the supply chain, a lack of conversation between teams, inefficient processes, and outdated technology.
Don’t let your weakest links break your supply chain. Identify problem areas and tackle them accordingly. Everything is connected therefore every element must be a priority.