5 Methods To Improve Supply Chain Performance

Supply chain performance is a significant factor in your business operations. Businesses can generate more profit and reduce cost by shortening the delivery time. In other words, with an effective supply chain, you can gain advantage over your competitors.

On the contrary, low supply chain performance can be a drain on your resources, so it’s critical for every business to plan for a lean and economical supply chain. Here are 5 methods to help you utilize your internal and external resources to optimize supply chain performance.

How to improve supply chain performance?

1. Evaluate your suppliers

Evaluating your suppliers should be the first step in optimizing your supply chain performance since it starts with your suppliers. There are 3 things to consider:

• Communication: Without effective communication, a supplier-business owner relationship is doomed to collapse. So evaluate the success of your supplier communications as a starting point. Evaluate if the suppliers can provide high-quality products in a timely manner. Working with communicative suppliers will help resolve incurred problems quickly.
• Reliability: Suppliers must be trustworthy and reliable. Your supply chain will suffer if your supplier consistently falls behind on your purchase orders, or otherwise breaks their commitments. In that instance, cutting relationships with those suppliers would be a quick method to enhance your supply chain. Alibaba is a good place to find a manufacturer that can fulfill your needs.

• Speed: Delivery speed is important. Consider how quickly your suppliers can deliver your orders. Operating a global supply chain with an overseas supplier may not be efficient if you are operating a lean supply chain and just ordering small quantities at a time. A nearby local vendor can be a better option in this case.

2. Analyze your supply chain strategy

Lean, economical, and reliable supply networks are the hallmarks of successful ones. Therefore, you should review your supply chain strategy and goals to make sure you’re applying the best plan for your business, your costs stay low and your process remains dependable.

• Align with your business model: For an e-Commerce business, dropshipping can be a good model. B2B companies can be more beneficial by converting to a wholesale model.
• Do not miss out any option: Working with your supplier to see if they would be willing to send their goods through an alternative logistics provider, or if they prefer to use a nominated 3PL provider with higher expenses.
• Enhance your resources: The COVID-19 has placed a bad impact on the global supply chain, not just any single business. Finding partners, vendors and logistics agents that can handle your goods diligently. By doing this, you are secured in the event of incurred problems in your supply chain model.

Analyzing your supply chain strategy

3. Predict the market demand

Predicting the market demand using available data can increase supply chain efficiency. For instance, if you are aware that November is a big sale month in the US market due to Black Friday demand, work with your supply chain partners to make sure you have enough supply to satisfy customer demand.

Consider elements such as geography, suppliers, vendors, shipping lines, etc. If you’re working with a Chinese vendor, for instance, you might need to schedule your purchase orders to take into account the Lunar New Year holiday. This guarantees on-time delivery of your goods while lowering your supply chain expenses.

4. Remove data silos

A data silo is a data source that is only available for one user or group, and is isolated from the rest of an organization. Additionally, data silos are a problem for any company attempting to manage a lean supply chain. If your supply chain manager, procurement representative, and demand planner don’t have access to the same data, it could result in expensive mistakes.

Greater supply chain visibility across your entire firm can be achieved by using a supply chain management software or an inventory management platform. You can even invite all stakeholders, including 3PL suppliers, if you really want to. This improves visibility aids in reducing errors and ironing out wrinkles in your supply chain operation, which means saving more costs for your business.

Removing data silos so everyone can be updated with real-time information

5. Monitor your supply chain system

It’s not a guarantee that something will continue to function smoothly just because it does now. Knowing this, savvy managers monitor important supply chain components to spot weak links, if any. Using inventory management technologies that integrate platforms for supplier and logistics management might help you spot problems in your supply chain immediately. You can also check and make the corrections manually.

Analyze your current performance as more frequently as possible, e.g on a weekly or monthly basis. Make an effort to spot any new patterns. Are there any late shipments, unfulfilled orders, or defective goods? Try to pinpoint where the problems in your system are coming from.

You may decide the best course of action to optimize the supply chain once you pinpoint what the problems are: is it the supplier, the shipping method or the staff not performing well?

Conclusion

Cutting costs and raising customer satisfaction will result in optimizing the supply chain performance. This can be achieved through smart methods like using local suppliers and logistics providers, developing a sustainable supply chain, and simplifying the workflow. Just keep in mind that it’s a time-consuming process and your goal is to improve it.