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Note: Our collaborative blog provides insights on ‘How to Keep Your Supply Chain Running Smoothly.’
There are many different aspects of running a business that will help it to be a successful venture. Managing your clients, ongoing projects, employees, financial stability, and other concerns is necessary, especially to experience success. Many of these cogs affect the others. For example, sound finances allow you to hire good employees and keep them around. These employees can, in turn, provide an excellent service to your clients, which then feeds into an increased profit margin for your business. However, there is one crucial part of business operations that can get pushed to the wayside. That is supply chain management or SCM. It is essential to keep your supply chain running smoothly.
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Why is Supply Chain Management So Important?
For most businesses, the idea is to deliver a product or service to the customer. Understandably, customers expect the correct product to arrive promptly. It is only possible with an effective supply chain. While it’s easier to picture this principle when you think about a customer receiving a physical product, the same principle applies to service.
For example, a car mechanic will require certain parts and tools to repair a vehicle. Without good supply chain management, they might have to pay extra for these parts, and they will have delays. The mechanic is now in a difficult position. The customer will have to pay more to make up for the costs, or they will have to lose out on profits to keep the customer happy. In both scenarios, the customer might still be displeased with the delay.
The above example alone reveals several significant benefits of a good supply chain:
- Improved customer satisfaction
- Decreased costs
- Decreased delays
However, there are other compelling reasons to focus on your supply chain management. As well as reducing costs, both in purchasing the needed components and operations, a good supply chain can increase your profits. If your expenses are low, your profits will rise, and saving otherwise wasted time allows you to finish each project more quickly.
It is essential to remember that time is money. So you can use this saved time to pick up another project and earn just as much money as before but in less time.
Having a robust supply chain also mitigates any potential disasters, whether they’re in your control or not. You’d be better able to deal with material or staff shortages, complex projects, and even natural disasters. However, if your supply chain management is poor or nonexistent, then even a slight hiccup can snowball into a business-ending catastrophe.
Finally, a good supply chain will almost be a match for employee morale. After all, having to regularly rush on a project because of supply issues only stresses employees out, making them less productive overall and more likely to leave for greener pastures
However, when each project receives proper management and your employees can depend on your supply chain, they will feel more secure.
How You Can Efficiently Manage Your Supply Chain
The benefits of good supply chain management are clear, but how can you implement it in your own business. The following suggestions will help you to establish and maintain a robust and efficient supply chain.
Find Dependable and Affordable Suppliers
Everything starts with the suppliers, so it makes sense to make sure that you have the best suppliers available. While it might be tempting to go for the cheapest suppliers every time, this isn’t always the most important thing to consider when choosing suppliers.
A reliable supplier that you can trust is vital for the business. Even if they’re slightly more expensive than you’d prefer to pay, a reliable supplier can save you much money in the long run. Confirm that you do the necessary research to identify reputable suppliers who are known for maintaining high standards.
Maintain Good Communication
Poor communication within businesses costs an average of $62.4 million per year for larger companies, and even smaller companies of around 100 employees face annual costs of approximately $420,000.
Therefore, it’s clear that companies should aim to improve communication throughout their operations, from the supplier to the client. As well as avoiding potentially costly errors, good communication can foster a good relationship between you and your supplier.
Use Technology To Optimize
Technology is taking a more significant role in business management, and that’s also true for supply chain processes. Manually driven processes result in less coordination and reduce supply chain visibility, making it harder for you to spot potential issues.
However, technology allows you to automate specific processes, which improves efficiency and potentially reduces costs. Avoid the trap of designing your system around technology, but make it work for you.
Optimize Inventory
There is always room for improvement in reducing costs, and optimizing your inventory can be a surefire way to do this. Holding and storing your inventory costs money, so while keeping a stockpile nearby is tempting, it isn’t always tenable.
Rather than taking on these holding costs, you should instead plan first. Doing so requires you to communicate with your supplier and track your customer’s preferences. Predicting and planning for demand will help you efficiently keep the supply moving, rather than storing it in one place draining your money.
Invest In Your Employees
Your employees are the lifeblood of your business, and your company can live or die on their effectiveness. So, take the time to invest in employee training and verify that anyone involved in the supply chain (or any other part of your business) precisely knows what they’re doing.
Even slight delays and issues can mount up with your supply chain, especially for larger companies. Upon training your employees, they will understand how the supply chain processes work. They can then more effectively keep it running.
Once you train your employees and have a good team working, make sure that you keep them on board. Communicate with them regularly and consider any suggestions, as they see weaknesses first-hand. Look after your employees, and they’ll look after you.
Review Your System Regularly
There will never be a perfect supply chain, which means that your supply chain strategy should be regularly reviewed and adjusted to better deal with any issues that crop up. It is also where good communication comes in, as this is the primary way to discover risks before disaster strikes.
Regular reviews will also reveal any potential improvements to efficiency, either through new technologies, new procedures, or even entirely new strategies. Specific industries deal better with different supply chain models, so research your competitors and see what works, or doesn’t work, for them.
Even if you’re happy with your supplier, always look for potentially cheaper or more suitable suppliers. Look into green and sustainable initiatives because new legislation and policies highlighting these issues are becoming more of a feature in the business world.
Consider worst-case scenarios, even those which seem unlikely. After all, who predicted what would happen in 2020?
Hire a Third Party to Manage Your Supply Chain
When in doubt, you should always consider hiring a third-party logistics provider. Using a specialized service like this will ensure that your supply chain management is at a high standard.
While it’s always tempting to try to do everything yourself, the money that you could potentially save with an efficient supply chain far outweighs the cost of hiring a third party. The same principle applies to accountants, attorneys, and other professionals. After all, the supply chain is what keeps your business running.
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Sales Tips: Keep Your Supply Chain Running Smoothly
- Hire employees dedicated to learning and performing well.
- Update training classes on a regular schedule.
- Encourage your employees to share their insights, difficulties, and suggestions for improvement.
- Treat employees as if they are your customers to retain them for the long term.
- Ask suppliers for their updates and insights to keep your supply chain running smoothly.
- Regularly review documentation to eliminate needless financial concerns.
- Host team celebrations in regards to business growth and shower them with appreciation.
- Reward those who contribute to your business success.
- At year-end, acknowledge your employees with a bonus and discuss updates for the new year.
- Celebrate Success!
Today’s insights are provided to help you achieve the Smooth Sale!
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