Effective supply chain management isn’t easy. There are multiple business units at work, as well as external vendors, internal team members, and various stakeholders.
As complicated as it can be, it becomes even more convoluted when you consider the myriad techniques you can use to control your supply chain.
If your current approach isn’t yielding the results you expect, read on for recommendations on some of the most effective supply chain management strategies.
6 Supply Chain Management Strategies to Consider
1. Focus on Strategic Hiring
Supply chain technologies are getting smarter and more sophisticated by the day. Today, it’s not uncommon to find supply chain systems integrated with artificial intelligence (AI), machine learning, and advanced data analytics.
However, it might not be enough to simply train your existing workers on these new systems. In fact, fewer than 40% of supply chain leaders say they’re confident in their current team’s ability to remain competitive in this emerging market.
Considering this, we recommend augmenting your current team with new employees who have the right skillsets. You may need to enlist the help of a staffing company with experience recruiting these types of professionals.
At the same time, look for ways to boost your existing employees’ skillsets. Find opportunities to help them learn these new tools and develop cross-functional process understanding.
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2. Reduce Risk With PPRR
A big part of optimizing your supply chain is preparing for known and hidden risks. One popular strategy is known by the acronym PPRR. This stands for:
First, prevent risks by taking precautions that can fortify your supply chain and make it more resilient. Then, develop a contingency plan that can help you prepare for any incidents that do occur.
When a disruptive event occurs, implement your contingency plan to minimize the negative impact. Finally, work to recover operations and bring everyone back up to normal capacity.
This methodology is most successful when your SCM system is designed to support it. In fact, all your enterprise software should be integrated seamlessly enough to deliver the data you need to implement every part of your PPRR strategy.
3. Invest in ESG Strategies
While your supply chain team may already be accustomed to complying with industry-specific rules and regulations, you may want to add ESG standards into the mix.
ESG stands for environmental, social, and governance. Companies that prioritize ESG are taking measures to reduce their carbon footprint, incorporate more sustainable materials, and lessen their contribution to climate risk.
If you follow suit, you’ll not only make your organization more eco-conscious, but you can boost your brand reputation.
In addition, you’ll be able to cater to an increasingly discerning customer base, which could grow your bottom line. Research shows that more than one-third of global consumers are willing to pay more for sustainability, which bodes well for ESG-minded businesses.
4. Minimize Cyber Supply Chain Risks
Chances are, the Internet of Things (IoT) has revolutionized your supply chain. Disparate business units are more connected than ever before, thanks in large part to ERP software that enables real-time, centralized data access.
Yet, the same solutions can also pose their fair share of risks. When so much information is freely shared across your organization, it can expose your business to a range of cybersecurity threats. Some of the most common include:
One of the best ways to prevent a cybersecurity attack is to establish strict compliance standards for all third-party vendors you allow to interface with your software.
You should also define user roles at the onset of any ERP or SCM implementation and use security controls to manage who can access the system and at what levels.
5. Centralize Supply Chain Documentation
Does your supply chain feel bogged down by paper-based purchase orders, inspection reports, customs forms, and bills of lading?
Most of these forms must pass through several different business units before they’re officially complete, which allows plenty of room for duplications, inaccuracies, and entry errors.
To streamline operations and enhance visibility, we recommend investing in a supply chain management system that can centralize all of this data as well as the activity surrounding it. This gives users one place to go for all their documentation needs and makes it easier for managers to access and review those files as required.
6. Focus on Metrics
Do you know how well your supply chain is performing at any given moment? Unless you have the right software in place, it can be nearly impossible to track these metrics in real-time.
Once you have a platform that allows around-the-clock visibility into your operations, don’t stop there. Establish key performance indicators (KPIs) to help you measure how successfully those operations are being carried out. Some of the most important KPIs to measure include:
- Warehousing expenses
- Supply chain cycle time
- Perfect order rate
- Inventory velocity
- Inventory-to-sales ratio
Determine how you’ll track these KPIs, as well as the actions you’ll take if you identify areas of inefficiency.
Your Supply Chain Doesn’t Have to Feel Like a Monolithic Beast
You can effectively manage and control your supply chain as long as you have the right people, processes, technology, and data. These supply chain management strategies can help you get there.
Our enterprise software consultants can help you improve operational visibility, lower your inherent risks, and achieve the benefits of digital transformation. Contact us below for a free consultation.