Developing a supply chain management strategy is complex and time consuming but can directly impact the state of your supply chain.
If you feel like your supply chain is prohibiting your company from exceeding its goals, you need to evaluate both it and your supply chain management strategy.
Creating a supply chain management strategy can be tricky and often complicated, but we've outlined five steps we believe all companies can take to make significant improvements in how goods flow in and out of their warehouses.
1. Understand How Your Supply Chain Strategies and Business Plans Connect
There are two components of a business plan that deal with the shipping and tracking of products from Point A to Point B and everywhere else in between. This is the supply chain and the supply chain management strategy. And, as you probably know, they differ.
Take for example Apple, maker of iPhones and iMacs, and the many suppliers within its supply chain. The parts for their iconic iPhone are created by a number of different manufacturers. For example, the LTE modem is produced by Qualcomm and the battery by Huapu (both located in China), and the display is created from Ashai in Japan. After suppliers have built these parts - and many others - and shipped them to Apple, the company builds its phones. From there, it distributes its finished product to third-party retailers to sell to consumers. Apple also sells their products directly to consumers. A supply chain and supply chain management strategy are broad concepts that involve the intricate process of managing suppliers and other factors in the supply chain, as well as the procedures to track information relating to these supply chain transactions.
While a company's supply chain strategy and supply chain management plan may be separate concepts, they are built on a single core idea: Employees manage numerous supply chains within an organization to reduce operational costs, gain a competitive advantage and deliver the best quality product and service to the customer.
An effective supply chain management strategy, then, involves using supply chain management systems to help companies overcome strategic challenges, economic pressures, government regulations and operational obstacles that might hinder their chance to efficiently move products.
Shortly, we'll dive more into what these solutions are and why your strategy should address these systems in great details.
2. Analyze your Current Supply Chain and Supply Chain Management Strategy
In order to make a change to your supply chain and management strategy, you first need to figure out what the problem (or problems) are and how to make adjustments.
Conducting this type of analysis is often very difficult to do alone because it's hard to step away from the situation and observe it from an outside perspective. This is where a third-party consulting firm can help. For those who don't want to be blindsided by a third-party search, here are a few things these professionals might do:
- Assist in an In-depth Discovery Process: This consulting firm can help you better understand your supply chain's strengths and deficiencies and assist in setting goals, which will be an important part of your supply chain management strategy.
- They Tell You Your Processes Are Out of Date: Many companies choose to or have to use manual data processing systems to record and exchange data. They may not have the cash to purchase a more robust system, or may not know how to fit a more advanced, automated data collection solution into their operations. In either case, an outside consultant will approach the situation in the same way: They'll inform both types of businesses that what they're trying to accomplish and how they're trying to carry out these objectives is failing to line up based on the data collecting devices they're using. They may recommend that the companies evaluate their budget to determine whether they can upgrade systems.
- Recommend Solutions: A consultant may review your facility and suggest ways you can reduce operational overhead and smooth out supply chain potholes. As we mentioned, they may recommend upgrading your SCMs, but they may propose looking further into your supply chain to ensure that no vendor is holding the chain down.
Prior to developing a strategy - which usually involves writing up a comprehensive report for C-suite executives - we highly recommend analyzing your supply chain and supply chain management procedures.
3. Work Closely With Your Team and Third-Party Vendors
One of the reasons supply chains falter is because there exists a disruption in the flow of communication or information exchange between strategy planners, third-party vendors and the main company.
To build a well-flushed-out supply chain management strategy, two things should happen:
- Your company must develop a team of experienced professionals (experts in supply chain management) to create and propose the strategy to C-suite executives. These individuals must be able to work together as a cohesive unit and also know how to present complex information in an easy-to-read format. Sure, this sounds like grade-school level advice. But how many times have teams been formed only to falter because individuals can't get on the same page? Or how often have they put together a great plan only to see it fall apart because they don't know how to present it to their unique audience in charge of resourcing? It happens all of the time.
- Your company must consistently communicate with vendors and be as transparent as possible. In April 2016, Robert Castellano, chip makers, solar, macro, and research analyst writing for Seeking Alpha, noted that Apple's problem in April 2016 - when iPhone sales were slumping - may have had to do with issues in its supply chain. He wondered whether Apple understood how many of its supply chain vendors were struggling financially, and if Apple had wrongly communicated to its suppliers to cut back on orders of the iPhone SE. If this was the case, the blame partly (and mostly) falls on Apple, but communication and information exchange is a two-way street.
Companies that succeed in accomplishing these two goals have a much greater chance of creating a supply chain strategy that supports their business objectives.
4. Choose the Right Solution
There are a number of different supply chain management solutions available. Here are some that RFgen offers:
- Inventory Management Solutions: Companies that are growing fast my find it difficult to rely solely on paper-based and manual data collection processes. While these might work OK for minor activities, manual data processing can become cumbersome when trying to track large quantities of inventory. That's where inventory management solutions come into play. Inventory management solutions can decrease inventory errors and returns, ensure stock piles are accurate by allowing for greater forecasting and can improve employee productivity and efficiency. The end result are happier customers and less stressed employees.
- Warehouse Automation Solutions: Running a warehouse can get expensive. Managers are constantly being pressured to cut costs while also maintaining the same high level of efficiency. And this is no easy task if they're not using the right solutions - or worse, they're completely relying on manual processes when they don't need to. Warehouse automation solutions can prevent stock-outs and reduce safety stock, decrease data entry errors, improve order accuracy, run operations 24/7, 7 days a week, 365 days a year, among other things. Warehouse automation solutions empower managers to make more informed decisions.
- Off-Network Mobility Solutions: Companies today are expanding their operations beyond the four walls of the warehouse and into the field. RFgen's off-network mobility solutions gives your mobile workforce the ability to work in real-time, mobile or batch mode using any type of mobile device.
As you can see, each system helps solve a specific problem. Once you've identified supply chain management problems, the next step is to find a software solution that can help solve them.
5. Implement the Plan
Your supply chain management strategy should include a serious discussion about how your team plans to implement the plan into the company's operations.
This process can be difficult to accomplish, especially if employees are set in their ways, but it shouldn't be cast aside.
In the third segment of this article, we noted how critical it is for companies to take seriously how team members communicate with each other and how transparent they are with third-party vendors. This practice should continue during the implementation process. Here's how communication plays a role in the implementation phase of the strategy:
- Gather Employee Feedback: Poll employees about what bothers them most about the current supply chain management strategy, and what they'd like to see improved. Then try to incorporate their feedback into your plan.
- Create an Eye-Pleasing Report: We get it, this isn't art class, but a well-designed and organized report will go a long way in helping you present your ideas in a uniformed, organized manner.
- Present to Upper Management: You need to know your audience, and make sure you've addressed all of their concerns in your report. Even if you don't have a solution for all of the issues, showing that you've extensively researched the problem will at least show executives that your team is taking the initiative and therefore can be trusted.This could be enough to convince them to support and fund your strategy.
- Roll out the Plan: Your strategy should include how you plan to implement the strategy into your employees' day-to-day jobs. It should address the role your team members will play. This might include educating managers and departments, for example, so they can then pass the knowledge down to their employees.
- Evaluate the Results: No plan is complete without a section that addresses how success will be measured. Companies need to evaluate the strategy by collecting both quantitative and qualitative data over the course of days, weeks, months and - if it gets to this point - years.
Forming a strategy isn't easy - as you can see there are many comprehensive steps involved that take a lot of explaining. However, if you adhere to these policies, we're confident you can build a supply chain management strategy that works great for your company.