A robust supply chain helps minimize disruptions and save organizations time and money. How do you create a robust SCM to reduce disruption and spend? Here are seven tips to help you.
Good supply chain management (SCM), especially in the ever-changing world of COVID-19, is more than just the materials and components your business needs to bring to market. It is also the processes and employees within the organization that make it all work. The recent pandemic has shown many organizations that their SCM wasn’t necessarily up to par.
For example, organizations that used parts, materials and good from China were negatively impacted as the virus spread through the country. Direct product and inventory flows were interrupted. These interruptions brought about conversations about how SCM needed to be handled going forward so that organizations were not at risk of going under because they could not the demand with their limited supplies.
While there still needs to be research done on the effect of the pandemic to global SCM, and risk management that should be put into place to prevent it in the future, organizations can take steps now to limit any more issues. A robust supply chain helps minimize disruptions and save organizations time and money. It also helps keep the management of the supply chain consistent.
How do you create a robust SCM to reduce disruption and spend? Here are seven tips to help you.
Build Strong Relationships
While you company needs to build strong relationships with your suppliers, you also need to build a strong SCM team. That team and the rest of the employees in your organization work together to build and maintain a strong SCM system. There must be transparency in the relationship from both sides. This will make the relationship mutually beneficial, especially in the changing climate of the COVID-19 world.
Communication Must Be Clear
In order to get your materials in a timely manner, you must communicate your needs to your suppliers. Set up a communication system that lets them know what your needs and goals are. Let them know how you expect them to respond Don’t leave them guessing when it comes to the details of the project you are working on. Provide them with as much information on the project and your desired outcome so they can give you a better product that surpasses your needs.
Keep Your Supply Chain Diversified
Never put all your eggs in one basket. By keeping your supply chain diversified and working with multiple suppliers, you will be able to maintain some continuity, especially if another disaster like COVID-19 befalls the global market. Plus, it encourages healthy competition, allowing you to get the best prices for your materials and services. Diverse supply chains help you increase the odds of never have a disruption.
Start with Good Data
Before engaging with a new supplier, make sure that your forecast data is accurate, and you have considered every angle of supply and demand. Not only will you be able to use the data for better forecasting, your supplier in collaboration with you can also use it. Good data helps prevent under-delivering and overstocking. It also reduces the risk of increased freight charges because you had to rush an order.
Use an Integrated System
An integrated software system to automate processes, track assets, and analyze data is important to SCM. It helps streamline the supply chain and provides you with the data you need to make educated decisions. It also helps reduce workforce tension, margins of error and the allows for better use of your organization’s resources.
Cost Effectiveness Should Be Balanced with Flexibility and Resiliency
By being flexible and resilient during a SCM situation such as COVID-19, your organization can weather the storm. Make sure you have plenty of options when it comes to suppliers, as mentioned above. Think ahead and take in as many scenarios as possible to make sure your supply chain remains robust even through a crisis. Always consider SCM as being susceptible to disruption and prepare for it. When you are flexible, you can be resilient.
Put A Backup Supply Chain Management Plan in Place
Think of how fast COVID-19 took the world. There is always a risk to your supply chain, and you will never be able to completely mitigate that risk. Instead, plan for the next catastrophe and put a backup plan in place. By diversifying, regionalizing and segmenting your supply chain, you can be ready for the next emergency.
Technology today lets organizations have complicated supply chain structures. However, don’t forget to build the interpersonal relationships with your suppliers. They are the bread to your customer’s butter. Without them, SCM won’t work.