Supply Chain Management: What you don’t know, Can hurt you.
Supply chain management depends on knowing what you need to know, when you need to know it. That means you need visibility into it from raw material ordering through delivery to the customer. Without that visibility, you cannot track and measure how well the supply chain is performing.
Supply Chain Management
In an ideal world, every bit of your supply chain will report up-to-the-minute information on any shipment or movement of inventory to a central system so you can track it instantly. Of course, reality is nowhere near this ideal. Most companies do not put that much investment into an ever-changing supply chain. This leaves a great deal of the chain hidden.
This lack of visibility hurts your company across the board:
- It causes redundancy. For larger companies, it is quite common to use two or more carriers to carry inventory on the same delivery routes. That redundancy can lead to higher costs because your company is not leveraging savings from using the same carrier.
- It creates the need for excess inventory. When you cannot predict and manage your supply chain, you need to keep extra inventory in the pipeline so nothing gets starved waiting on a shipment. This increases inventory carrying costs.
- It delays manufacturing and shipment times. Without visibility into the Supply Chain, you cannot predict with any certainty when inventory will arrive at a critical point. This can lead to manufacturing and shipping delays later in the pipeline.
- It affects customer service. Customers expect products to arrive when promised. When delays in the Supply Chain lead to delayed shipments, customers are not happy. This increases customer management costs and can cause customers to look elsewhere for products.
- It causes longer lead times. When you cannot accurately predict when raw materials will arrive at a given point, your manufacturing operations will need longer lead times on production. This can delay shipments and affect customer service.
- It increases Supply Chain costs. There is constant pressure to cut these expenses. Without visibility from one end to the other, finding places to cut costs without affecting production is difficult. This leaves Supply Chain managers cutting costs in areas where there is very little left to cut while spending too much in areas where there is no visibility.
A warehouse management system can help you manage your internal supply chain requirements. However, it does not give you visibility outside your internal operations. You need an integrated Supply Chain Management system to make this happen.
Benefits of Supply Chain Management Solution – Companies can forecast:
- Production planning
- Flow and process management
- Inventory management
- Customer delivery
- After-sales support and service
- Shipment tracking systems
A supply chain management system offers you the ability to do strategic, tactical, and operational planning without the need to gather information from a dozen systems. It brings together the critical components of purchasing, manufacturing, transportation, and warehousing under one umbrella. You can link each of those components with vendors, facilities, and markets. And you can take it enterprise wide.
Read Also: The Next Generation of Warehouse Management
With a reliable supply chain management system, you have visibility at a level you did not have in the past. It allows you to forecast production needs, manage inventory, deliver products to customers, give after-sales support, and track shipments, all in one system. This visibility is critical to making sure your company minimizes the impact of a supply chain that you cannot see.
Implementing a supply chain management system is no easy task, but once it has been put into place, every person and organization within the chain benefits tremendously. When an effective supply chain management system has been implemented, profits increase, efficiency improves and customer service which leads to repeat business.