by Yolanda Goodloe | December 6, 2019
A company’s supply chain system should be built on a strategy that aligns with the company’s overall strategy. Just as with everything else in business, a solid supply chain strategy can help to improve overall customer satisfaction, therefore improving profits.
Here a five key strategies and practices that will help you build a road map for becoming a more effective supply chain organization:
- Ensure you have a strong supply chain group with the “right” skill set.
Hiring the right employees can make or break your business. Employee recruitment is a key ingredient for a strong supply chain and aligning them in the right positions is extremely important to building an efficient pipeline for supply chain management.
Take your time during the hiring process. While there may be an urge to bring on candidates quickly just to fill the spot, take the time to interview, assess and properly vet candidates. This will ensure that you hire the right employees with the right skills, the first time around, costing you less money in the long run.
- Establish key supplier alliances.
A supply chain involves a series of steps involved to get a product or service to the customer and can be confusing to newbies and experts alike. Make sure that your employees understand logistics and why each person in the chain is so important to the overall success of your company.
In an ideal supply chain relationship, both customers and suppliers get connected in ways that allow them to easily communicate and exchange information. It does not matter if the relationship is with a customer, vendor, supplier, partner or a strategic ally, sharing information and understanding the value they add can lead to enhanced knowledge that allows you to achieve more efficiencies across the chain.
Create alliances with those outside the immediate business to support the supply chain’s productivity.
- Manage total cost of ownership
Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system. It examines all costs associated with acquisition, transportation, and storage of products within the chain. It reveals costs that aren’t always reflected in upfront pricing.
- Set the strategic sourcing strategy
In a competitive market, cutting costs is a smart way to stay one step ahead of everyone else. So what costs should you cut? The best cuts to make are in areas that already cost you a lot of money, such as inventory.
A cloud-based inventory management system may be the tool you need to lower the cost of inventory. It will help you know your reorder point, streamline your stock, lower your lead time, and deliver accurate metrics for tracking key performance indicators and forecasting demand. The better you manage your inventory, the easier it will be to cut its costs.
- Manage compliance and risk.
It’s clear that effectively managing and mitigating your compliance risk makes it much easier to have a strong culture of compliance, reduce your risk and achieve your compliance goals. An effective compliance risk assessment should include, at a minimum, risk identification, measurement, control, monitoring and reporting.
With global warming becoming more of an issue, green initiatives are popping up everywhere. With environmental initiatives making increasing sense in competitive markets, going green can help to reduce bottom-line costs, and simultaneously create customer appeal by promoting your sustainability efforts.
Businesses that have social responsibility are focused on the company’s impact on the environment and community. They also have a big impact on their local communities, from the local economy to the identity of that community. A higher percentage of money spent at small businesses stays in the local community and many small businesses love to give back to their community through programs and charities.
These five practices will help you build a road map for becoming a more effective supply chain organization. Ensuring you have a strong supply chain group with the right skill set is extremely important to building an efficient pipeline for your business, while understanding the importance of supplier relationship management can lead to enhanced knowledge that allows you to achieve more efficiencies across the supply chain.
These efficiencies will result in a substantial reduction in cost if you manage your total cost of ownership while reducing inventory and running a lean company. Lastly mitigating your risk and staying in compliance will also help you to become a more effective supply chain business as well as a more desirable strategic partner.