by 7 Supply Chain Management Mistakes and How to Avoid Them
In previous stable times, working within the tight schedules backed up by globalization made sense. However, supply chain management is changing. The world is now realizing the “just-in-time” approach isn’t as reliable as we once thought.
To ensure you don’t make supply chain management mistakes in this new era of business, it’s crucial to be open-minded and seek out solid advice. In this guide, we will run through seven supply chain management mistakes and how to avoid them.
Read on to learn how you can maintain and develop your supply chain management practices for the better.
What Is Supply Chain Management?
Before we jump into the different mistakes you can make with supply chain management, here is a little refresher of what it’s all about.
Supply chain management involves managing the flow of services and goods from the point of creation to the point of sale as a final product. For instance, from the point a tree is cut down right through to it being sold as part of a wardrobe involves some sort of supply chain management.
In general, there are five vital elements to supply chain management (SCM). These are strategy, sourcing of raw materials, production, distributing the product or service, and returns.
Supply chain managers should try to manage and reduce costs in this process. They should also put in place policies to ensure there are no shortages throughout the supply chain so that operations can continue to run on schedule.
- Failure to Plan for Unexpected Changes
Before the COVID-19 pandemic, many businesses never thought in their wildest dreams that supply chains could be so severely affected. It explains why so many businesses collapsed. They had no backup plans in place for huge supply chain disruptions.
The key now is to explore backup options. If your current supply chain fails to deliver, what alternatives do you have on the table to keep things operational?
In addition, you should plan to align your supply chain with future business goals. Too many businesses think short-term, but long-term growth is just as important a consideration.
- Your Business Processes Aren’t Optimized
Right now, you could be losing thousands of dollars because your business processes aren’t optimized. The reality is, that your competition is investing in making their processes more efficient, and you should too.
But, how do you go about this? Well, supply chain software is the clear pathway forward for better business efficiency. Asset visibility and monitoring of your processes is the first step.
Then, once you have the supply chain data, you can make more informed choices about what changes you need to make.
- Poor Vendor Relations
As much as software can help you, effective communication between buyers and sellers is at the backbone of optimizing supply chains. Do you have the right people communicating on behalf of your company?
If not, you need to get these people in line with proper training. Or, it may be the case that you need more competent staff to represent your company when dealing with supply chain bargaining and issues.
Furthermore, don’t chase cost savings over the chance to develop solid bonds with vendors. In the long run, you may end up making better cost savings with a vendor who meshes with your personality.
- Not Dealing With Cyber Security Threats
If you are ignoring common cyber security threats, this attitude may end up costing you tons of money in the long run. All it takes is one successful breach from an experienced cyber criminal to wreck your operations.
Nowadays, the threat of security breaches is growing. Hackers are employing ever more complex strategies to take advantage of legitimate enterprises. One of the best ways to ensure you don’t experience serious cyber threats is to look into managed IT services.
- Having Too Many Partners
You know the old saying, “too many chefs spoil the broth.” Too many partners in a supply chain can have a similar effect.
When you have too many supply chain partners, things get unnecessarily complicated. You should aim to keep operating procedures as simple as possible. Or your company will become overwhelmed with the different practices and procedures it needs to deal with various supplier standards of business. For instance, having a dedicated fleet can be beneficial to your business. It will give you more control over the vehicles to use, resulting in better efficiency, reliability, and cost savings. It also allows you to operate vehicles with specific features to your needs and requirements while still providing the best services possible for your customers
- Having Too Few Partners
If you have too few partners, you run the risk of losing a particular supply chain and scrambling to find a replacement. A good supply chain management strategy involves you having someone lined up to replace a failed supply chain at short notice.
The key is to find a balance in the number of partners you have. Thus, it’s a good idea to sit down and analyze individual potential partners to see what more they can offer you, other than the priority reasons why you wish to use them.
- Your Processes Are Too Lean
Of course, efficiency is important. But you don’t want to be running efficiently to the extremes where your business becomes fragile. Some solid advice is to consider the balance between resiliency and efficiency.
To do this, you need to take a step back every so often and look at the bigger picture when it comes to your supply chain operations. Check for potential weaknesses in all your processes. If you find any, try to bolster these processes with more resilient policies.
For example, if you are running a “just-in-time” operation, acknowledge some of the more popular purchases that your customers are buying. You can then opt to stock up a little on those goods to add a level of resilience to the once rather fragile process.
Avoid These Common Supply Chain Management Mistakes
We’ve now run through some common supply chain management mistakes. If you consider these mistakes and try to rid any of them from your business practices, then you give your company the chance to grow and flourish.
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