Published Monday 18th October 2021
When supply chains work properly, we rarely hear about them. They operate in the background, ensuring products reach customers on time.
However, when supply chains hit a problem, they suddenly risk becoming big news. We’re seeing this in the UK at the moment, with a driver shortage and increased red tape leading to delivery delays and product shortages. It’s quickly become one of the most talked-about issues the country is facing.
While there may be valid logistical reasons for this, customers are frustrated and just want the problem solved as quickly as possible. Businesses risk losing substantial amounts of money, and there’s also the threat of potential reputational damage if a company isn’t seen to be dealing with the issue fast enough.
So how can businesses mitigate against risks like these and future proof their supply chain?
It may sound obvious, but an overly complex supply chain can mean more opportunities for things to go wrong. If a company is juggling multiple suppliers and processes, there’s a greater risk that someone will eventually take their eye off the ball. This can lead to delays in sourcing, manufacturing and shipping, or a lack of visibility.
Complexity Destroys Efficiency
An ongoing collaboration between Michigan State University and APCIS Supply Chain Council, called Beyond The Horizons, found that supply chain complexity is one of the biggest challenges facing business leaders.
Operating in a global market often means more suppliers, which, in turn, leads to different workflows, different compliance requirements and additional vulnerable links in the chain. It’s therefore easy for global supply chains to become increasingly tangled and complex.
However, this doesn’t mean businesses should just accept it. Dan Gilmore, Editor-in-Chief of ‘Supply Chain Digest’, has written that he once heard a PepsiCo supply chain executive state that “complexity is like a cancer that destroys supply chain efficiency.” He’s not the only analyst who believes that supply chain simplification is essential for success.
Supply chain simplification is a straightforward concept in theory. It essentially means making the processes involved in supplying a product or service to customers less complicated.
Simplifying your business processes can not only reduce the chances of mistakes and delays, but it can also lead to cost savings, improved efficiency and a better quality product. A streamlined supply chain is lean and will deliver with minimal waste, leaving it better prepared to deal with unforeseen issues. If a business process can be simplified, it will also usually enhance overall performance. This leads to more consistent quality, lower operation costs and greater responsiveness.
Combining these things can ultimately result in more satisfied customers, which is the end goal of most businesses. Stripping back the steps in your supply chain speeds up the process of getting your product or service to customers, making them happy. And satisfied customers translate into profits and repeat business. Removing unnecessary procedures also removes the associated costs, which further increases your profit margin.
Back to Basics
Simplifying supply chains might seem like a challenge at first, particularly for a large global organisation. This doesn’t have to be the case, though, especially if you approach it step-by-step.
A good starting point is to analyse the entire supply chain and look for where you can simplify it. Collin Albrecht, Senior Director of Supply Chain with Charter Communications, believes that companies should approach this with a “back to basics” mindset. He advises that a good first step is to physically map out your supply chain to get an overview of how it works.
In Albrecht’s words, “if it looks like spaghetti on paper, chances are it’s not going to be good.”
A high-level audit of supply chain processes can also highlight areas of concern, such as suppliers who offer poor rates or if you’re using ‘middlemen’ when it would be better to go direct. It will also pinpoint opportunities for optimisation, which can help in the quest for shorter lead times and the elimination of unnecessary costs.
Technology is on Your Side
Supply chain optimisation and simplification is made easier thanks to new technological developments. Machine learning, AI and automation all have the potential to streamline supply chain management operations and help businesses better manage any complexities.
Automating certain operational tasks not only streamlines your supply chain by removing unwanted overheads but also reduces the risk of human error. Furthermore, automation frees up employees to focus on generating value for the business instead of becoming bogged down with basic tasks.
Other types of technology which can be utilised include logistics solutions to provide real-time tracking, barcoding to deliver up-to-date information about your stock at the touch of a button, and forecasting programmes to give you instant figures and save you the time spent manually reviewing reports.
Investing in technology will save your business money in the long run by helping you simplify the supply chain process and reduce inefficiencies in your organisation.
Unnecessary data can also bloat your supply chain. Manually entering data into different systems wastes time and can lead to inaccuracies. What’s more, storing data in multiple places, which can be accessed by a range of people, increases the risk of a security breach.
Eliminating duplicate data entry processes saves time and makes the resulting system easier to maintain, generating additional time for employees to work on more pressing projects.
The good news is you don’t have to deal with all of this alone. Expense Reduction Analysts have the expertise and experience required to carry out a thorough review of your supply chain and can recommend strategies to optimise and simplify your supply chain processes. Get in touch with our team today and find out how we can help trim the fat from your business, boost profits and improve customer satisfaction.