A well-running and managed supply chain is the lifeblood of any retail business, and this is more true than ever in the digital age. Online shopping and convenient shipping have significantly increased customer demands and expectations. Businesses must meet these increased expectations to avoid drowning in a sea of competition.
Businesses must modernize their supply chains to deliver effectively in the face of vast competition and a growing market. The following strategies can help you optimize and transform your supply chain.
Optimizing Supply Chain Management
The process of transforming supply chain management can differ for every company depending on its size and current operation.
However, there are common components of the transformation process that most companies will follow, which include the following.
Setting Goals and Benchmarks
The first step of the process is to determine the goals and benchmarks of the transformation. Are you trying to speed up delivery? Cut down on inventory costs? Become more sustainable? Determining the transformation’s ultimate goals will help economize on the steps taken to improve operations.
Analyze Current Standing
Next, evaluate the state of the current supply chain and any relevant difficulties or areas of improvement. Be sure to determine whether current supply chain operations and capabilities can accommodate the desired goals and benchmarks.
Determine Necessary Changes and Plan Forward
Based on the problems and areas of improvement discovered above, leadership can determine changes that need to be made. Develop a plan to address these changes, whether in the technology, structure, or processes across the supply chain. Remember that changes should be flexible and scalable to ensure they can adapt to maintain a successful supply chain.
Talent and Team Development
One key point of any successful supply chain transformation is employee buy-in. Employees and leadership need to be informed of the necessary developments and trained to adopt any changes.
Don’t expect an instant shift, though. Instead, adequate training and ample time should be provided to adapt to the new policies and procedures. Involve your employees in the process rather than just a piece of the procedure.
Capturing and Measuring KPIs
To evaluate the success of the changes and adaptations, you must pinpoint and measure key performance indicators across the line. According to an AJG Transport survey, the most commonly tracked KPIs for supply chain monitoring include:
- Daily performance (40%)
- Cost reduction (35%)
- Production service rate (29%)
- Inventory turnover (28%)
- Production time (27%)
However, your business may have additional KPIs related to your changes.
Transforming Supply Chain Logistics
Supply chain logistics and supply chain management go hand in hand, but they are different parts of the whole. Measuring KPIs will likely uncover logistical areas that need improvement. But remember, logistics deserves a significant portion of attention in itself.
This is especially true considering the exorbitant costs of supply chain interruptions. To evaluate current supply chain logistics operations, assess the following areas in detail.
Technology
Modern technology can optimize supply chain logistics and management in many ways. Conversely, outdated methods can create significant hindrances. According to an executive survey from McKinsey, spreadsheets are still the primary planning tool for supply chains, but more companies are beginning to adopt AI-based tools to forecast. For example, Walgreens is now using AI technology to help them anticipate innumerable factors across the supply chain, including demand for specific brands, sizes, and flavors and the ideal times to hold extra stock.
Supplier Relationships
A strong relationship with your supplier can be the heart of your supply chain. Strengthening and improving supplier relationships can help foster a more resilient and streamlined supply chain.
You can accomplish this by engaging in open dialogues with your suppliers, informing them of your desire to improve supply chain operations, and involving them in the process. Ultimately, your supplier can be a strong collaborator in transforming your supply chain, provided you maintain a strong relationship with them.
Inventory Management
Inventory issues can easily cause vast issues across the supply chain, whether you are holding on to inventory for too long, waiting too long for resupplies, or experiencing significant interruptions. Determine the specific problem areas so you can implement solutions.
For example, if you hold stock too long, you may need to switch to a Just-In-Time inventory system.
Can Your Supply Chain Keep Up with the Digital Age?
Is your supply chain equipped to handle the high demands of customers in the digital age? Transforming a supply chain will take time and resources but often lead to significant returns. To evaluate your supply chain, consider the following factors:
- Do you regularly have inventory shortages or surpluses?
- Are you embracing technologies that could simplify or streamline processes?
- Does your supply chain keep up with current demand?
- Would your supply chain fail or slow with a sudden uptick in traffic?
By following the above strategies, you can build a supply chain that is prepared to handle any demand and offers unprecedented resilience.
