A robust supply chain minimizes disruption, which can cost delivering companies significant amounts of time and money, in addition to tarnishing their reputation. Consistency in the supply chain is crucial to a companyís overall performance, but can this be attained when the factors that drive it seem to be out of the companyís direct control?
Below are some tips for building a robust supply chain in order to reduce the risk of disruption and, ultimately, reduce spend.
Build Strong Relationships
The relationships between your organization and suppliers, and also between your supply chain management team and the rest of the stakeholders within your organization, are a key factor in building and maintaining a strong supply chain. Strong relationships require transparency on both sides and always aim to be mutually beneficial.
Suppliers canít deliver in the way that is most effective for your organization if they donít have a very good idea of what it is that your organization needs from them. Develop a system for communicating your needs and goals, and establish clearly how the supplier should respond. Make sure that youíre communicating beyond bare-bones descriptions of a project. Being detailed about your desired outcome can aid the supplier in providing a better end product and even surpassing your expectations.
Diversify Your Supply Chain
Keep strong relationships with several suppliers to ensure that you can maintain continuity in your supply chain. Having good relationships with several reliable suppliers can also help encourage healthy competition, netting you the best prices and services available. Miniscule supply chains are fragile and ineffective; diverse supply chains improve the odds of success and encourage a healthier bottom line.
Start With Good Data
When your numbers are off, you and your supplier are bound to suffer losses. Make sure that the numbers from which you draw your forecasts are accurate and that youíve contemplated potential demand from every angle. Use those strong supplier relationships to work collaboratively with suppliers in the development of forecasts. This can help prevent instances of under-delivering and overstocking, while also reducing the chances of increased freight charges for rush orders.
Institute Integrated Systems
Todayís sophisticated software solutions allow for more effective, streamlined supply chains. Use systems that collect, integrate, and analyze data so that it can be distributed to all stakeholders in your organization in a way that allows educated decisions to be made at all levels. An accurate picture of suppliers is necessary to anticipate their value. Automation of processes through high-quality software also reduces strain on the workforce, cuts down on the margin of error, and allows for more effective use of resources.
Balance Flexibility and Resiliency With Cost Effectiveness
Flexibility and resiliency are major factors in a healthy supply chain. Flexibility means more supplier options and potentially lower costs when standard products are used instead of customized ones. Resiliency means that youíre better able to endure and recover from incidences that would normally cause catastrophic interruption of your supply chain.
Sometimes, building a more robust supply chain will cost you, and you wonít necessarily see the benefits afforded by increasing resiliency and flexibility until something disastrous happens and you realize youíre able to cope. ďCheapĒ canít be the end-all-be-all when building a robust supply chain; this kind of thinking doesnít account for mitigating the risk of disruption and implied risks inherent to other areas of the business, like legal and compliance.
Always Have a Backup Plan
The risk to your supply chain is inherent, and canít be completely mitigated. Instead, you must plan for catastrophe and have a contingency plan in place so that you can still meet the needs of your customers even when disaster strikes. Supply chain diversification, regionalization, and segmentation are all effective ways to offset supply chain interruption.
A Final Word on Developing a Robust Supply Chain
Todayís technology allows for more complicated supply chains, which means more opportunities for these chains to break. That same technology also allows for the anticipation and mitigation of risk. Use these tools wisely, but donít forget that interpersonal relationships are still a big part of supply chain success.