Different functions collectively make a business successful. Some become prominent, depicting the organization’s reputation like marketing, HR, and finance. In contrast, some remain in the backend but contribute essential elements for the business operations. The supply chain is undoubtedly among those business functions.
According to the BLS, about 5 million people are globally employed in the supply chain and logistics segment. Around 1 million employees work in storage and warehousing alone. Surprisingly, making the use of supply chain automation generates 90% of the total environmental footprint of a business. It shows how significant this function is for companies.
The COVID-19 pandemic and subsequent lockdowns reiterated the importance of supply chain and logistics. When the entire world was locked, ensuring the supply of life-saving material was a challenge for supply chain professionals. Then it showed how strategic this function could get. Moreover, it is pivotal for smooth business operations. Strikingly, the significance of supply chain management quadruples in the manufacturing industry. In today’s remote world, having the skill and expertise of experienced virtual CFO services can give you the edge in your supply chain strategy. There it requires an extensive supply of raw material and other essential inputs.
Supply chain management can get extremely tricky and challenging. It demands proper strategic planning like any other business function. Mishaps in supply chain management give very little chance of improvement. A single mistake can result in a long production halt and operational disruptions. Therefore, this article mentions four strategies to strengthen the supply chain management of your business.
1. Develop an Expert Team for Supply Chain Management
There’s a CFO supervising a specialized team of finance professionals. There’s a CMO in charge of top-notch marketers. You also have a CHRO to look after human resource operations with certified HR professionals. Then why not the same for supply chain management. It would do your organization good if you developed a competent supply chain team. And for this, you need to hire the best talent in the market. For instance, the master’s degree in logistics and supply chain management online produces competent graduates. These individuals pursue online education alongside gaining industry exposure to strengthen their career profile. Any business that opts to run the supply chain smoothly must develop a team of such capable professionals.
The intricacies of supply chain management demand a dedicated team of experts. It might look like just one job on the front, but it encompasses multiple domains of work. It includes warehousing, logistics, storage, procurement, and reverse logistics as well. Each of them is complex and requires special attention. Therefore, you must have a professional team that excels in these areas. The supply chain department conducts external interactions with different market stakeholders. Only a proper professional can appropriately deal with them.
2. Strategically Choose External Partners
As mentioned, the supply chain involves extensive coordination with external stakeholders of an organization. Mainly, they form partnerships and strategic alliances with external suppliers. The most common form of such outsourcing and strategic alliance is for logistics. Developing an in-house logistics infrastructure is not just challenging but highly costly as well. It requires vast amounts of capital investment and human resource needs. Therefore, organizations prefer outsourcing logistics to third-party providers.
However, there are many options for third-party logistics providers. You have various ranges, including 1st, 2nd, 3rd, 4th, and 5th party logistics providers. These modes include different services and perks; some include just transport, whereas some involve warehousing facilities. Some also provide proper distribution networks for your products. Now the essential part is in choosing the suitable options. For this, you must consider the existing company resources and infer what extent of supply chain operations it can bear on its own. Then opt for the outsourcing contract accordingly.
3. Move toward Digitization
Like every other business function, technology has entered supply chain management in full swing as well. There are innumerable options of software automation in supply chain management. The most famous and widely accepted mode of supply chain digitization is through Enterprise Resource Planning (ERP) programs. The possibilities are endless, and the degree of process control and supervision is on another level with these software implementations.
It offers automatic purchase order placements. ERP automatically places orders to the vendors when the inventory drops below a certain level. Installing a Cloud ERP software makes sure that orders can be placed automatically when the inventory drops below a certain level. It helps the supply chain to ensure the availability of essential materials in time. It prevents the stock from depleting and provides effective data management and analytics, giving access to real-time data. It helps make critical strategic decisions about stock management and other supply chain operations. Here are some ERP stats that will help you decide if ERP is worth considering.
4. Avoid Information Silo
Information silo refers to the restriction of information communication among different relevant stakeholders. The information gets limited within the hands of a few. It is a common problem in supply chain management because so many parallel operations are active simultaneously. The report of one function is essential for the decision-making of the other. Any barrier in cross-communication of this information can result in inefficiency of the process.
Therefore, supply chain management must possess collaborative information-sharing systems. It is possible by creating ERP-based cloud-sharing portals where all the real-time information is accessible for different departments’ decision-makers.
It will speed up the entire supply chain operations and add more transparency to the overall process.
The global supply chain market currently stands at 24 billion dollars. However, the overall value additions it creates for different businesses surpass this amount. It is an essential function for your business’s success and continuity. It acts as the backbone for smooth production and operations. Therefore, it deserves special attention. The key to effective supply chain management lies in analyzing it under the light of your business strategy, then making strategic decisions to improve its operational efficiency.