5 Ways To Establish Effective Supply Chain Management and Reap Its Benefits
This is a guest post by Bryan Christiansen.
Consider you are an importer, sourcing pharmaceutical intermediary chemicals for a leading manufacturing company in the U.S. You are importing the products from India, China, Thailand, and Vietnam and delivering them to a pharmaceutical manufacturing plant in Columbus, Ohio.
You need to manage multiple suppliers, vendors, shipping partners, government agencies, trucking companies, and finally – your client. You have to effectively manage and operate all the moving parts for a robust supply chain to deliver products to your clients. Effective supply chain management (SCM) helps you in achieving that. Let us dive into some of the means to establish it.
Equipment and processes at various points of the supply chain, from warehouse to delivery, can be automated. It is undeniable that automation significantly increases the efficiency of your supply chain operations. This is possible as automation reduces human errors and increases supply chain velocity. Picking robots pick products faster and more accurately and sorting robots precisely sort products taking very little time. Similarly, other autonomous robots reduce the time and improve the accuracy of supply chain processes.
The information transfer on automation decisions has to start from the top of the organization and decisions should be need-based. You can consider cobots, which work alongside humans, before plunging into fully automated robots. This helps in a smoother transition to a fully automated supply chain powered by IoT-enabled fully autonomous robots. An additional factor you have to consider is the financial viability of automating equipment and processes in the supply chain. If the capital expenditure can break even within a reasonable time, implementation is worth considering.
2. Information Technology
The exchange of accurate and timely information is necessary for smooth supply chain operations. Information technology enables the collecting, organizing, and disseminating of information across the whole supply chain – making it lean, cost-effective, and efficient. For instance, using a maintenance automation tool to manage warehouse maintenance causes minimal disruption to normal warehouse operations. This reduces the labor, time, and effort involved in maintaining well-run warehouse operations.
Analytics also help to establish effective SCM. These tools can use the large volume of data collected to generate actionable insights into warehouse operations. For example, analytics can be used to estimate future demand for various products. This demand can be backward engineered to estimate the number of materials required and the time in which they are required. Thus, demand forecast analytics helps to optimize the inventory levels and in turn the supply chain operations. Similarly, analytics can also be used to solve various problems in SCM to make it more efficient.
3. Supply Chain Visibility
Supply chain visibility is the ability to view and track the movement of materials and goods through the supply chain from a central location. Supply chains are complex and it is difficult to have complete visibility into supply chain operations, especially into suppliers and distributors. But, with clever use of modern technology, this is possible.
This helps to identify issues and resolve them faster without spreading the trouble to the rest of the supply chain. Visibility into the operations of suppliers and distributors helps you adjust and pivot your operations with agility. Supply chain visibility aided by modern technology can assist in maintaining optimal inventory, reducing costs, and increasing efficiency.
4. Employee Investment
Employees working at docks are important for any business in importing or exporting goods from the United States. In recent years, the remuneration of these employees has gone up, contributing to about 35 to 65 percent of the distribution and fulfillment costs. Most employees only have the capability to perform some usual tasks, but they lack the skills to tackle problems or challenges in the workplace.
Employees should be provided coaching, mentoring, and training to impart them with knowledge of the supply chain they are part of. You also need to provide them with a clear career progression path to have a purpose for their performance. Another suggestion you can use is empowering them with responsibilities so they can act according to their knowledge and training.
5. Continuous Improvement
Kaizen is the philosophy of continuous improvement that is part of six sigma and lean methodologies for improving supply chains. You might have initiated SCM for some specific goals and SCM has helped you in achieving these goals. But you should not dismantle your SCM efforts once those goals are achieved.
Suppose you have upgraded from forklifts to robotic forklifts to move pallets in and out of shipping containers. This definitely improves the time and speed of pallet movement operations. But – you should not be stopping the efforts to improve this part of operations. You can try various combinations of using robotic forklifts to improve on these metrics. Also, you can attempt different stacking techniques. In short, SCM should not be undertaken as a one-time effort, but as a continuous process to improve efficiency and reduce supply chain costs.
Effective SCM Delivers
Effective SCM impacts all the aspects that facilitate the flow of goods in the supply chain. Aside from covering the operational aspects, it also covers data, finance, and people management. It is a holistic approach to improving the efficiency of the supply chain while reducing costs.
Some of the benefits of building an effective SCM in your organization are:
- Reduced cost
- Optimized supply chain
- Decreased lead time
- Higher-quality delivers
- Higher supply chain visibility
- Supply chain resilience
- Agile supply chain
Though the benefits of SCM are obvious and plentiful, it is not an easy task to manage such a complex network of interconnected entities. To reap the benefits of SCM, you need to rely on the different means discussed above to establish effective SCM.
This was a guest post by Bryan Christiansen.
About the Author
Bryan Christiansen is the founder and CEO of Limble CMMS. Limble is a modern, easy-to-use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.