January 2018 is off to a flying start. Many businesses will be analyzing the previous year, hence, evaluating the supply chain activities from 2017. This period of evaluation provides opportunity for improvement; reduced costs, development of enhanced processes as well as an overall increase in efficiency and productivity.
The sustainability and success of an organization supply chain not only determines the profit margin. It also can have a substantial impact on brand perception. Supply chain capabilities are developing year on year and keeping up to date with these improvements is especially relevant to the continuous growth of the business.
Supply chains surround us every day and we talk a lot about their effectiveness and optimizing them. We know what the end result should look like:
- Inventory management
- Cost reductions
- 100% On Time delivery & lead-time management
- Optimized production
- Enthusiastic and fully motivated, high performing teams
But how are we going to achieve this?
As a start, what does your supply chain look like now? What was effective last year and what needs improvement? Your supply chain should start with your suppliers, mapping your inbound freight methods, warehousing of raw materials, production processes, employee placement and job roles, packing and dispatch and finally the delivery to your customer.
A supply chain is not effective if you do not have accurate demand and forecast information that you can share with your suppliers. Forecasting your requirements and regularly sharing information with your supplier means that they are aware and hopefully doing their own supply planning. Ultimately ensuring they have the right level of materials available to you ex-stock when you require it or on an agreed lead-time. Conduct regular, systematic physical inventory cycle counts. By doing this your inventory levels should be 100% accurate. Without accurate inventory levels your chances of late deliveries are increased.
Cost can be reduced in several ways. Negotiate with your suppliers, the unit cost of goods usually decreases as the quantity of goods purchased increases. Suppliers should be optimizing their own internal costs, so they can assist and reward their loyal customers with cost savings. Freight costs can be minimized by keeping a strong relationship with regular freight companies. Can they improve their rates and delivery times if you agree to give them a certain percentage of your work. Another way to improve freight cost and also reduce lead-times is to use a turn-key manufacturing company, someone who can take care of more than one or all of the stages in your supply chain for you. This reduces handling and extra freight between vendors.
100% On Time Delivery & Lead-time Management
Being able to consistently deliver to your clients on time is obviously a competitive advantage. However, in order to do this, you need to have a highly effective team running very efficient processes. Being able to accurately schedule jobs and provide achievable lead-times to your clients is vital to your supply chain success and the building up of your brand:
- Know how long it takes for your suppliers to obtain the materials they need to produce your components.
- Once the material is received, how long is the supplier’s production time?
- What is the best freight option from the supplier to your warehouse.
- Identify the best delivery address for the goods to minimize extra handling.
- Once the goods are received into your warehouse, based on your predicted work load and the manpower you have available, how long does it take for your staff to complete final assembly stages, inspect and perform quality checks, and finally package your products?
- Finally, when can you expect to deliver to your client?
A thorough understanding and analysis of these points means that you are able to provide accurate lead-times, schedule accordingly and finally, deliver the goods on time every time.
Optimized Production & Planning
Examine your existing workflow and production processes. Identify elements that may be causing disturbances to the flow. Walk through the process of your supply chain. An effective supply chain follows a straight forward path, from the initial design or idea and finishes with the receipt to stock or delivery to your customer. Do you have the right physical flow of goods? Collaborate and discuss workflow issues and bottle necks with project managers to install improvement plans for the manufacturing processes. The tools an employee uses in the manufacturing industry influence his/her productivity and the production rate of parts and components. Manufacturing companies often find that an upgrade to newer and improved machinery and equipment ensures their competitiveness in the market. Is there components that are currently manufactured in house, that could be outsourced to a contract manufacturer?
High Performing Teams
Do you have the right talent managing your supply chain? The manufacturing industry is changing. There is always new technology and new ideas. Technological advances can change the skills required for certain tasks. When the entire team is working together towards the same goal, the manufacturing floor is most productive. Therefore, it is important to ensure that all staff members are comfortable as part of a team and are willing to participate in team discussions. The better the team are working together, and the higher the level of communication, the more a productive workplace culture will develop.
In conclusion, analysis, Innovation and a willingness to embrace change is key to having a successful supply chain in 2018. Finally, if companies are embracing change now they have made the first and foremost step in achieving supply chain excellence.
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