Global Survey Reveals Why Many Supply Chains Fail at Efficiency

Dustin Caudell
Wed, Dec 16, 2015
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Manufacturers need better visibility of supply chains to provide quality products through optimal distribution.

Distribution is more than just a means of getting a product to a customer. In the modern market, companies promote shipping options right alongside merchandise descriptions, and stores with stock outs lose business to multiple brick-and-mortar or e-commerce competitors.

Despite consumer demand for supply chain efficiency, visibility and dependability, some companies are slow to upgrade current systems. A recent report conducted by business consultant Crimson & Co found nearly a third of global supply chain procedures aren't effective, according to Digital Supply Chain. Every organization should routinely audit their warehouse management and distribution practices to ensure they can meet the challenges presented by the modern world.

Why Companies Fall Behind
The Crimson & Co report surveyed more than 1000 supply chains in 20 countries. The company conducted the research across multiple industries over a five-year period. The results concluded 71 percent of distribution, receiving and inventory management procedures were effective. Only 5 percent of supply chains studied received top marks. The report described most of the businesses that passed as competent.

The remaining 29 percent failed to meet the study's efficiency standards. One of the notable findings of the report is how poorly Europe and North America performed. These two regions had lower competency results than the rest of the global subjects.

Supply Chain Digital suggested Europe and North America may lag behind because they are over-reliant on old practices. It's possible companies realized how important supply chain performance is to overall business operations and created systems for visibility and efficiency a while ago. Since technology and strategies develop so quickly in the modern world, companies and regions that created supply chain systems more recently may have the advantage. Failing to update distribution and inventory management solutions hurts companies that expand globally or start offering e-commerce services.

Reevaluation Best Practices
Companies must remain vigilant. Once an organization realizes the importance of supply chain efficiency, it can't fall behind in operation and maintenance of strategies. Inbound Logistics said a company should always be on the lookout for inventory management and distribution optimization.

Distribution centers need to find new ways to look at operations. First, a warehouse needs to make sure it has an automated data collection solution to maintain visibility of how current strategies perform. Once a company has accurate and consistent information, it can inspect full records for troubling trends or opportunities. It may mean calling in a third party to inspect operations or comparing warehouse data to other business departments to see what company stakeholders need from warehouse operations. Getting new eyes on automated data collection reports could help managers generate new ideas.

Another source for insight is looking at what the competition does. A company needs to reevaluate procedures to prevent from falling behind. Managers should compare warehouse data to industry standards to measure success or find holes in the process.

Innovation Implementation
A company may resist investing in new ideas because it's afraid innovations won't pan out. Some organizations are more comfortable settling for older strategies proven effective instead of taking advantage of new technology and creative solutions. While it pays to be cautious, certain supply chain innovations quickly become standards.

Supply Chain 24/7 said supply chains wishing to stay competitive in the modern world would have to invest in tools that provide visibility and flexibility. The ability to deliver goods and have inventory on hand is more important than ever, and businesses need to find ways to provide top-notch services for a greater variety of consumers than in the past. Technology is increasingly vital to all daily warehouse operations.

If a company can't communicate data quickly, it can't keep up with the market. An RFgen customer case study detailed how a manufacturer, Amano, realized its pen and paper operations needed new technology solutions to stay competitive. The company worked with RFgen to implement integrated JD Edwards data collection software to track inventory, costs and warehouse schedules. Managers now have complete visibility of the supply chain through serial number records.

Organizations operating in the modern world can't settle for fine. As supply chains grow more important for attracting consumers and keeping them happy, businesses need new solutions to meet demands. A system that worked adequately in the past may not provide optimal performance in the future, so managers should careful audit solutions and see if its time for a new approach.

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