The 8 Mistakes You Make in The Supply Chain and How to Avoid Them
Welcome to another edition of Logistics Monday.
It is often said that supply chain management is a rather complex operation. Therefore, a lot of businesses are looking for the most efficient and effective ways on how to avoid supply chain mistakes.
Costly supply chain mistakes can be avoided, and it’s never been easier to do so. It only takes one mistake in the supply chain to cause ripples throughout your company, from production to distribution. For example, if you don’t have enough supplies at hand to keep up with demand, you may lose customers. On the other hand, if you overstock your inventory, that could lead to higher storage costs and other expenses.
Below are the common mistakes in the supply chain and how to avoid them:
- KPIs and data for granted
Businesses need reliable, relevant data. It’s one of the easiest, and most costly, mistakes to ignore data related to supply chain management. In addition to these mistakes, you’ll find it more difficult to avoid others without reliable data
KPIs to measure in the supply chain include customer satisfaction, cost per order processed, and cost per order handled, as well as total order value and fill rate. Measure the KPIs you need, not the ones you don’t. Determine which metrics and data are most important for your company’s supply chain and focus on them.
- Customer service is subpar
Your company won’t benefit as much from your supply chain if you’re not creating effective relationships on both ends. The success of your business depends on both vendors and customers. Your supply chain management will be more effective if you have better relationships with them.
Choosing a supplier is influenced by price. However, it’s also important to consider the type of company you’ll be working with when searching for the best price. Supply chain management is also about understanding your customers’ needs. Ask the customer service survey to evaluate the performance of the supply chain. There’s a good chance that you’ll find out that adopting a one-size-fits-all approach isn’t very viable as you start to work with your customers. Depending on what service level your customers need, you might find that some are overserviced while others need more support. Finding the right balance between both is the key to a great supply chain management strategy.
- Unpreparedness for business disruptions
The neglect of forming a plan for potential business disruption is another major error made by supply chain managers. A company’s supply chain strategy may lead to an existential problem, even if it is short-term if it is not ready to embrace unexpected changes.
In the event of unexpected supply chain disruptions, supply chain managers should have a plan in place. In this way, a company can react quickly to disruptions in the supply chain and minimize the potential problems. An organization’s long-term goals must also be considered when designing the supply chain. It may be difficult for supply chain managers to modify a strategy in the future if they based their decisions only on the current requirements of an organization.
Companies need to plan for disruptions in their supply chains. An effective risk management strategy can help to achieve this. Furthermore, managers need to perform a thorough supply chain analysis to identify any vulnerabilities and respond immediately. A company, regardless of its size, is susceptible to supply chain disruptions.
- Lacking a plan
Neglecting to plan for the future is another common mistake companies make. In the absence of a flexible supply chain strategy that can adapt to unexpected changes and grow with your company’s needs, it will be of little use to you.
Prepare for disruptions to the supply chain by having a plan in place. You will be able to deal with anything that goes wrong in your supply chain quickly, minimizing or avoiding the possibility of affecting your customers.
A supply chain design should also be aligned with the long-term goals of your business. In creating your supply chain management strategy, you may not be able to adjust it in the future if you focus only on your company’s current needs. When your company expands or adds new products, make sure your supply chain is ready.
- Price Fluctuation
Materials and technology pricing can fluctuate wildly in the manufacturing and supply chain industries. It is for this reason that supply chain managers must keep an eye on pricing trends and analyze market movements. Whenever price changes arise due to unforeseeable natural events or political unrest, it is advisable to prepare for increases or decreases in a specific material or commodity’s value.
- Having a messy process
A mistake that often creeps up gradually is having too many partners in the supply chain. Alternatively, maybe you’re so lean that when there’s a problem, your supply chain falls apart. The problem that’s making your process messy needs to be resolved and you must find the balance that works best for your firm.
The supply chain process becomes more complex and riskier when it entails many contractors, suppliers, shipping companies, etc. Identify and eliminate any partners who are damaging your bottom line or that you don’t need. It can be tricky to strike the right balance between too many and not enough employees, but it’s worth the effort.
Supply chains that are too lean or too agile can also be problematic. A hybrid approach is most effective for most companies. Maintaining your supply chain’s cost-consciousness and efficiency while being flexible to meet the demand and supply changes is achievable when you strike a balance between the two approaches.
- Inadequate optimization of business processes
A common mistake is not optimizing supply chain management processes. This type of problem usually develops slowly as a company grows or changes direction. Consequently, supply chain practices that previously worked reasonably well can become less efficient as a result.
To optimize your supply chain management, you should start by integrating your teams. Silos are inefficient compared to networks. Ensure that all supply chain managers can collaborate easily and are clear on their common objectives.
Transparency in the supply chain is a crucial component of optimizing your business processes. By ensuring end-to-end visibility, precise data can be collected, efficiency can be maximized, and risk management can be enhanced. Additionally, security controls will be improved.
- Ineffective relationships with vendors:
Picking a vendor solely on price is a mistake when it comes to choosing vendors. Find a vendor who is not only willing to offer a price within your business’s budget but is also willing to offer a range of solutions so that any supply-chain issues that may arise can be addressed.
An inventory reduction, improved employee performance, and increased efficiency are all benefits of this type of vendor relationship.
What TGL Can Offer
TGL is a logistics company that offers high-quality and affordable services to companies across the globe. As a logistics company, our value lies in our flexibility to provide clients with cost-effective solutions to meet their specific needs. At TGL, we recognize that each client has different needs and so our experts are always standing by to help you every step of the way. We handle our client’s freight with total transparency. By offering value-added services at affordable prices, we help them to reduce their costs and improve their profit margins.
Get in touch with our Experts to discuss your Logistics requirements.
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