Maximising efficiency and profitability across the supply chain is a moving target for supply chain managers. Faced with ever-changing customer demands and economic influences, even the most sophisticated end-to-end supply chains will require continual improvements. Wouter Satijn, Sales Director, Joloda Hydraroll, says optimisation can be achieved by frequently revisiting these seven important questions:
Do I know my Tier 2 suppliers?
Supply chain managers should always keep in mind the chain doesn’t begin with the company’s suppliers. Instead, it begins with their suppliers’ suppliers – the ones providing them with raw materials, components and possibly services. It’s essential to know who these suppliers are, their products, their costs, and their lead times, as this knowledge can be leveraged to negotiate volume pricing.
Could I negotiate supplier costs of goods?
A deal may have already been negotiated with suppliers, but that doesn’t mean it can’t be renegotiated if they have optimised their internal processes. Suppliers are constantly looking for ways to reduce their costs, so it should be possible for supply chain managers to renegotiate the year-over-year costs (to an order of 3-5%) built into the agreement with them.
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Is demand information shared with all suppliers?
Suppliers will do their best to provide what’s needed, but they will do so by spending as little money as possible.
If a company and its suppliers aren’t sharing demand information, there’s a risk they might not have access to enough supplies. The opposite could also be true, and suppliers might be holding too much inventory. If that’s the case, they have overspent while trying to meet demand. As a result, whether it’s communicated or not, that cost will be passed on.
It’s important to understand the financial implications of both situations, which means knowing what to revise and cancel down. A supplier’s lead times should be checked frequently to ensure they can still react to any changes in the order.
How could customer demand planning be sharper?
Although customers seem to know what they want and when, correct customer demand planning can show otherwise. Customer forecasts are a good starting point, but their needs can be understood and planned for so much better with market analysis, a look at their history, seasonality, the competitive landscape and more. This robust type of planning can also help lower costs in the supply chain.
Are inventory records accurate?
Warehouse management systems are an excellent way to keep an accurate inventory record, but physical checks are still recommended. Regular, systematic cycle counts, and physical inventories are the only way to ensure complete accuracy. Without this, there’s a higher likelihood of shipping products to customers late or buying in stock that isn’t needed.
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Could risk management improve?
Planning is crucial. A lot can go wrong in a supply chain, and that risk needs to be managed. That means having a standard plan, a backup plan, and even a backup plan for the backup plan. Being as prepared as possible by planning for any event will help keep things moving and stop the company from losing money when things don’t go according to plan. To prepare for instances of extreme weather, for instance, it’s necessary to plan alternative routes or identify alternative carriers in advance.
In what ways could supply chain logistics be optimised?
Supply chain managers should frequently consider individual logistics processes and their impact on the overall efficiency of the supply chain.
For example, could and should that process be automated? How could it affect productivity, efficiency, customer service and cost savings? It can sometimes surprise supply chain managers to hear, but automating the loading and unloading of trucks transporting their goods between the factories and warehouses rates very highly across these criteria.
For one thing, automated handling of pallets drastically reduces the risk of delays in service, accidents, and damage during loading or unloading. It saves thousands of arduous man hours and eliminates the need for costly forklift trucks altogether.
What’s more, with a faster and more reliable loading and unloading process, fewer trucks are needed to transport the required number of pallets per day. This results in less time lost to idling and more time gained for strategising, such as adapting routes to possible traffic restrictions, avoiding peak traffic hours, or adjusting the service schedule to the most productive internal workflows.
Demands on supply chains are constantly evolving, but keeping these seven questions front of mind can help ensure their continual optimisation. In doing so, supply chain managers could unlock huge savings from supplier costs, inefficient manual processes, inventory mismanagement and more.