Supply Chain Management is a complex process that is crucial to ensure smooth production operations and customer satisfaction. Both an optimal technology application and well-maintained fleet play a significant role in a successful supply chain process.
By Cleveland SCORE
Managing the supply chain is important to business as it assists in achieving its objectives. It helps ensure that manufacturing processes and/or services rendered to clients continue to operate smoothly thus resulting in your ability to retain customers and meet their needs timely. This requires the need to manage supplier relationships, information, contracts and much more. The need to manage is ever increasing and this is coupled with the need to continue to follow the rules related to your supply requirements. The supply chain management process involves multiple components – suppliers, manufacturers, distributors, retailers and consumers.
There are five major components to managing the supply chain: planning, resourcing, inventory, production, transportation and return goods.
- Planning – whether a business is planning to manufacture the goods or purchase ready made goods, the planning process should identify what the needs are and the best and most cost-effective supplier for the goods.
- Sourcing – is the most crucial step in the process as it involves determining who supplies the materials/products at the best price. Vendors in the supply chain must be properly evaluated and determined to be qualified to meet your needs.
- Inventory – inventory management is important to enable you to respond to your customers’ need for products. You should evaluate and secure multiple suppliers so that in the event of supply disruptions such as those experienced recently during covid, there are alternate solutions.
- Production, warehousing & transportation – this aspect of the supply chain assesses and evaluates your ability to produce the optimal volume of quality goods and the type and arrangement for the proper storage of them.
- Return of goods – this is the end of the supply cycle and ensures that any product a customer needs to return has the proper protocol to do so. Not only the actual return of the item but also the return to inventory process and refund of funds to customers.
A good process for managing your supply chain can afford a company the following benefits:
- An optimal supply chain management process can generate production efficiencies and allows you to get products to customers on a timely basis.
- One of the single most significant benefits is it allows for reduction in costs for inventory, shipping and overhead. As inventories are properly managed to meet client needs through defined sales and product volume expectation. This reduces not only the overall volume of inventory but also identifies those products that may not have optimal turnover rates.
- From a logistics perspective, by properly managing the number of distribution and supplier channels you can reduce transportation costs.
- Proper management of the supply chain offers a good control mechanism against the common issues related to supply chains. By having the full scope picture of the chain, you can properly identify and proactively manage issues related to increasing costs for transportation and distribution, adverse weather events that may impact transportation, and changes in rules and regulations that may impact raw material production and/or transportation of raw materials.
- Improved cash flow can result as the proper management impacts cost and prices as well as ensuring better control of the overall stock.
- Allows for greater flexibility. Your company will be better positioned to take advantage of opportunities that may present themselves such as sudden increases in demand.
- Reduces the potential for delays in distribution, logistics, production, and shipments. This supports better customer satisfaction and your ability to create an efficient production environment.
The role of technology in supply chain management cannot be overstated. It allows for streamlining of every aspect within the supply chain process and allows companies to provide quality products at the right time and cost to satisfy their customers. Going forward the role of technology will only increase.
Consider how technology improves the supply chain process.
- Efficiency – The use of telematics permits viewing of transportation idle time. This means that managers, drivers and workers can be traced on a timely basis. Additionally, it provides transport schedule information thus relieving the need for manual tracking.
- Fulfilling consumer expectations – In the current environment consumers expect goods in a 1–3-day window of receipt from time of order. Through technology, consumers can now track their order from placement to fulfillment. This increases transparency thus increasing loyalty and retention. Additionally, through management of vehicle maintenance records, you can ensure that delays are avoided or kept to a minimum.
- Increased collaboration – Through technology, communication between critical parties can be ensured. Manufacturers can provide real-time information on their needs to suppliers thus keeping production schedules smooth.
- Cost reductions – By understanding customer needs, suppliers can ensure ready access to resources and materials as needed. Fleet managers can use the data to ensure proper maintenance, driver skills, idle time, all factors that can result in cost savings. Finally, this is a tool for fuel monitoring which in today’s economy can be a substantial cost given the price for diesel.
- Better inventory management – By understanding manufacturers resource needs and the timing for them, suppliers can control inventory levels and determine the best locations for inventory to ensure they are available in a timely manner.
Technology is at the heart of a good supply chain and this needs to be coupled with a well-maintained fleet to enable moving goods through the process timely. As with any technology, it is crucial to understand your requirements to obtain the optimal application that meets your needs and best fits with your current processes. Along with this, it is crucial to ensure proper project planning such that, appropriate vendor evaluation is performed, milestones are identified, interdependences detailed and proper testing occurs. Finally, there should be a period for proper training of users along with user guides readily available.
In the event your business may have a unique need for outside assistance with operational issues, growth initiatives or other business matters, SCORE mentors can offer you expertise and support. Mentors with a wide range of technical and user experience are available on request.
The Cleveland Chapter of SCORE was founded in 1965 to foster and support the small business community in Northeast Ohio through mentoring and education. There are currently 80 volunteers with experience in the fields of business ownership, managers, accountants, attorneys and other business fields that are ready to share their knowledge through mentoring. For more information about our services for small business visit the website at www.cleveland.SCORE.org or call (216) 503-8160.
In addition to mentoring services, there are also webinars and on-demand classes listed on the website. To attend a webinar, visit the site and register. Following are upcoming events in June:
Seminar Title Date & Time
Non-Profit: Starting a Nonprofit in Ohio June 13 – 7:00 PM
Finding your Nonprofit June 15 – 7:00 PM
Building Capacity for your Nonprofit June 20 – 7:00 PM
Quickbooks Online for Beginners June 22 – 8:00 AM
Credit Repair June 23 – 7:00 PM
Grant Writing Basics June 27 – 7:00 PM
Quickbooks Online – Intermediate User June 29 – 8:00 AM