Top Tips For An Effective Supply Chain

supply chain

Good management of a supply chain is so important to the smooth running of any business in any industry. Most businesses will need to deal with how raw materials are delivered, costed and moved on to the production line. From there, individual materials which make up the finished article need to be assembled to the point where the final product finds its way to the customers door. Certainly, some businesses will have more of a complex chain than others, but at the end of the day the message is simple – control your supply chain and your business will thrive.

How the environment affects the supply chain

The current environment with Covid-19 is making enterprise very difficult. As we all know, some suppliers are struggling to keep their production lines going – they have their own supply chains too. So there is definitely unpredictability in the air. Therefore, now is the time to streamline. Now is the time to consider searching out alternative suppliers for your supply chain in case of the worst-case scenario.

Build strong relationships for the sake of the supply chain

Bear in mind that you want to be an essential contract to your supplier. By the law of returns we know that the larger the number of goods you are asking for on an on-going basis, the better deal you are going to get. So by going for bigger means when times are difficult and the supplier needs to cut back, you will be the client your supplier is more likely to hold onto.

This is good thinking in two ways (1) the larger the sale the lower the relative cost is likely to be and (2) the more solid the relationship you will create because both supply chains are less vulnerable. Indeed, the more you buy from one supplier, the less complex your monthly administration will be – but don’t put all your eggs in one basket without scouting around for an alternative you can use in emergencies.

Keep monitoring to a maximum

It is very easy to think of a supplier as outside of the control of your company and so find yourself just concentrating on your own business logistics. But any supplier is an important cog in your supply chain. Make time to monitor what each supplier is providing and that they are keeping to what they are contracted to do. Only pay for what you receive – and only for those goods which are of the standard you expected. Flag up issues that appear outside of the timeframe.

Take time to choose suppliers for the supply chain

When choosing your supplier make sure they can be flexible in order to meet your business needs. For instance, when is the latest you can make an order? Do their schedules tally with your requirements? Can they guarantee a specific delivery time window? Check out previous (or existing) business relationships. Has there been any worrying issues or complaints? You will also want to make sure that they have all the necessary compliance certificates (such as health and safety and insurance). This may seem tiresome, but it will cut down your own business risk if things go awry.

Build flexibility into your orders

Your pricing strategies pricing will be based upon your internal budgets – but that final agreed costing needs to be flexible to deal with any sudden changes in the environment or the market which may occur. In fact, it is also true that even though lengthier fixed pricing can be comforting and easier to administer, it may mean the supplier will offer less competitive rates. So, getting the costing right in your supply chain can be quite a balancing act. It is always best to create some form of procurement system where you can clearly see when any contract is up within the supply chain and you can negotiate necessary changes at time of expiration of the contract.

Does your supplier have an effective distribution network?

An essential part of supply is distribution so ensure that your supplier has a robust distribution network and a reputable courier. So, check out how any supplies are distributed and what kind of backup is used when delivery is put at risk.

How will you handle disputes?

Disputes at some level of the supply chain are inevitable. Don’t wait for them to happen – ensure you have a set plan of action should conflict arise. Dealing with disputes fairly and professionally is more likely to keep your supplier happy and on board. Perhaps most of all, this approach will keep the supply chain moving normally without too much disruption. If problems are smoothed out quickly and fairly, there is less chance of any bad feeling, reputations being put at risk, or any bad feedback finding its way into the public arena.

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July 2024