by Caterina Rokke
An efficient and smart supply chain can help save time, revenue, risk, resources, and reputation. So, what should companies focus on in order to optimize their supply chains? Here are 5 steps to help you gain better overview and control over your supply chain processes.
Firstly, insight and overview are the fundaments of an efficient supply chain. You need to have full overview of your suppliers, who they are, what product lines they are associated with, and what goods or components they supply.
Secondly, one effective way of dividing up these suppliers is to rank them according to how critical their deliveries are.
Lastly, to gain an end-to-end insight into the logistics of your supply chain, it might be relevant to closely examine what the product origin of the materials or products you are supplied with is.
Gaining a detailed overview like this will allow your organization to evaluate the whole supply chain, from one end to another. This will help give you an indication of what areas have room for improvement, and put you in a better position to be able to control the supply chain processes.
Once your organization has gotten a full overview of your suppliers, the next step is to complete a supply chain risk analysis.
First, it is important to identify what potential problems could undermine your key business initiatives or projects. This identification process will prepare your organization for worst-case scenarios.
Second, address whether or not your most important and critical deliveries depend on one supplier, or if it can be supplied by several? To ensure supply chain resilience in the face of disruption, being able to source critical deliveries from more than one supplier is important.
Third, you should ask whether your suppliers’ country have strict ethical and environmental standards? Will their standards be able to meet the standards expected of the legal framework of your country, or requirements of your certifications?
The fundamental overview you now have of your suppliers, and the considerations within the risk analysis, alongside the future ambitions of your organization are the basic building blocks that form your supply chain strategy.
In order to create a supply chain strategy, you first need to understand the current position of your organization and how you got there.
Secondly, you need to identify your organization’s mid- and long–term goals of the organization. What is the goal of your supply chain strategy? The vision, purpose, and mission of your organization needs to be clear when creating the strategy.
Lastly, what steps will have to be taken in order to achieve your goals? What needs to be changed in your business practices and operations?
After you’ve formulated a supply chain strategy, you need an action plan with measurable key performance indicators (KPI’s). These measurable indicators will allow you to easily measure the performance of your strategy, and monitor your progress in following the strategy.
The KPI’s you chose should be based on the goals you have identified for your supply chain strategy. Attentively chosen KPI’s will help your organization better make sense of patterns of order–, shipment–, and transaction–data.
You should determine how often the KPI’s are to be evaluated, and what actions will be taken if the indicators are not as wanted or predicted.
After completing the strategy, risk analysis, and action plan, you should be share it with your suppliers.
First, share your overall goal and strategy with them. It is important to communicate your ambitions and expectations, and how your suppliers will help you reach them.
Second, question if your supplier’s production– and operational processes follow the required ethical standards for you to reach your goals? If your suppliers lack ethical business practices, then that can jeopardize your company. Share your expectations about ethical and environmental business practices with your suppliers.
Lastly, aim to build a lasting relationship with your suppliers. If you are successful, they will be, and vice versa. Cooperate and communicate in order to put your plan into action, and attain your supply chain goals together.