How to Better Optimize Your Supply Chain Management Process
Modern supply chains have become extremely complex networks of technology, people, machines and goods.
For any modern business, mastery of supply chain management is essential, and finding the best way to handle the complexity of the supply chain is necessary business success.
Supply chain optimization is all about finding how to operate your supply chain at top efficiency — reducing operating costs, minimizing loss and improving visibility of supply chain operations.
These strategies are some of the best ways to optimize a small business’s supply chain
1. Forecasting and Demand Planning
Information like sales history, season, consumer confidence and even social media posts can all hint to how much demand you’ll have for your products in the future. If you can anticipate when demand will rise or fall, you can secure a valuable competitive advantage — and avoid common inventory issues like overstocking or stock-outs.
Many inventory management solutions also come with forecasting and demand planning tools you can use to estimate product demand. With this information, you can better plan how much stock to keep on hand.
2. Know When to Outsource
Most organizations typically have a few areas of supply chain management where they excel. Outside of their core competencies, however, they may struggle to manage peak performance.
There are benefits to keeping work in-house, but not everything has to be done by your team. Outsourcing supply chain management work — like supply chain audits or IT — frees you up to focus on what your organization is really good at. In the long run, this can help get the most out of your investment in supply chain management.
Work also doesn’t have to be fully outsourced. You can lean on recommendations from business partners without entirely handing off a particular task. For example, you may want to know about available upgrades to standard pallet wrappings, or how IoT technology can help to streamline business and supply chain operations. Talking with your packaging supplier or IT services provider could help you there.
3. Build Strong Supplier Relationships
Connections with suppliers should be treated as a top priority. While you may prefer to always work with the cheapest supplier available, cultivating and maintaining strong supplier relationships can help you build a more effective supply chain.
For example, sharing demand information with your suppliers can help them anticipate spikes in demand and avoid stock-outs. Your suppliers may also have supply and demand information that they can pass on to you, letting you provide updates to your customers when certain items are in short supply.
Suppliers invested in your success are also more likely to help you achieve your business goals. Some suppliers may even offer you special rates or advice on certain business decisions.
4. Effective Inventory Control
Ideally, your business will have a 100% accurate inventory count at all times. When you look at your business’s resource planning system, you know you can count on the numbers you see.
This is easier said than done, of course — but with the right counting methods, it’s possible to have very accurate and up-to-date inventory counts at all times.
If you currently rely on yearly inventory counts or a similar, non-frequent counting strategy, switching to a different technique may help. Cycle counting, for example, allows you to ensure counts happen regularly without increasing labor necessary.
Changing the way you count can also be beneficial. For example, counting both floor-to-sheet and sheet-to-floor will help you maintain accurate counts and avoid phantom inventory.
6. Build a Sustainable Supply Chain
The supply chain is typically a business’s biggest source of emissions. Moving and storing goods takes a lot of energy, usually in the form of gasoline and other fossil fuels.
Finding ways to cut down on supply chain emissions can both make your business more sustainable and help you optimize operations. There’s good evidence that sustainability can be a major cost-saver — reducing waste and attracting eco-conscious consumers may offset the costs of going green.
5. Establish Regular Reviews
In any area of business management, you typically don’t see the impact of changes right away. The same is true for supply chain management — the benefits of better inventory counting strategies and supplier relationship management are only seen in time.
Regularly reviewing your supply chain operations helps to ensure that supply chain optimization is an ongoing process, rather than a one-time event. It will also help you track which changes are working well for your business — and which may not be especially helpful.
These reviews will also help you track the effectiveness of your forecasting and inventory management strategies. If you find that your demand estimates are regularly off, you can take action to create more accurate forecasts.
The Best Techniques for Optimized Supply Chain Management
Effective supply chain management can help you cut costs and deliver better service to your customers. Simple adjustments like changing up your inventory counting strategy or outsourcing certain tasks can help you make your supply chain operations as efficient as possible.
Longer-term strategies — like building stronger supplier relationships — will help you guarantee success for your business in the future.