3 Supply Chain Management Tactics to Sustain Your Competitive Advantage
The global pandemic morphed the logistics landscape into a place of no return. It’s no surprise that the most successful businesses are investing heavily into their supply chain and entire logistics operations right now in order to maintain their lead. As important as developing products and establishing value is, supply chain management has become the third piece in the triumvirate of competitive supply chain advantage in modern times. Gaining an advantage in the current business climate can seem like a Herculean feat, but it’s entirely possible to gain and sustain your edge.
It’s important to understand that as customer needs change, so too must businesses modify how they run their day-to-day operations. Many businesses continue to operate the same way they did decades ago and wonder why they come short of their quarterly goals every time.
Below we’ll explore 3 recommendations for your business to keep a firm grip on your competitive supply chain advantage and continue to scale.
Get everyone on board
Integration among the supply chain has become a trend that has proven to increase bottom-line profits and reduce costs because it delves into a fundamental change in how you see your partners. Suppliers, manufacturers, and 3PL providers are your partners. It is the collaborative efforts between these channels that allow for much greater business potential than silos of information passing through each stage.
Openly sharing each partner’s strengths and challenges paints a broader picture of the supply chain and gives every partner the awareness to make decisions that will affect their respective function.
- Hold strategic planning functions with representatives from the shipper, supplier, vendor, distributor, and 3PLs to discuss trends and develop strategies.
- Analyze core competencies of each partner and distribute functions across the chain to take advantage of multiple core competencies.
- Grant access or request access from suppliers, shippers, etc. to their data to analyze how trends will affect your function.
- Include everyone at the inception of a new contract to discuss and agree to terms from the beginning.
- Hold weekly meetings to discuss issues and pertinent information to discourage siloed information.
If it’s not broken, make it unbreakable
Continuous improvement is a philosophy based on long-term goals and solutions as opposed to short-term profits or decisions that may hinder performance in the long run. It requires deep dives into all of your departments to scrutinize and analyze every process to ensure only the more efficient, effective practices remain.
The beauty of this step is that it does not need to come in one fell swoop. What’s most important is to cultivate a mentality of change and evolution, rather than stagnation and doing the same thing every year. The words, “This is how we’ve always done it,” should never be uttered again.
- Encourage employees to come up with solutions to exceptions as they happen, weekly.
- Act on low-cost exceptions and treat them as high-cost exceptions. By finding solutions to smaller disruptions, they will put employees in a better position to tackle larger disruptions.
- Quarterly process audits to access the efficacy of improvements.
- Apply Lean principles to your processes and workspaces.
- Develop KPIs that will encourage continuous improvement.
Know your roots
Figuring out what your businesses’ largest cost drivers are and their business impact can reveal inefficiencies previously overlooked. To do this, root cause analyses of disruptions should look beyond the symptoms and find a cure. Finding the root of the issue may reveal problems that may continue to drive costs over time.
For example, an increase in overtime may be superficially resolved by hiring more staff. However, a root cause analysis may reveal that employees are committing more errors and have to stay late to fix their issues. They might have higher rework due to a customer changing the delivery location last minute.
Both of these issues can be resolved with increased employee training and granting SOP visibility. Neither of these solutions could be surmised without a root cause analysis. This step also goes hand-in-hand with continual improvement.
- Encourage a spirit of owning up to mistakes and looking deeper rather than how to put out fires.
- Host team-building activities that encourage thinking critically about exceptions and how to improve processes.
- Invest in AI and technologies to drive down production costs over time.
- Assign a task force with members from each department to gather data and implement best practices.
As new technologies arise and data becomes a driving force for automation, these strategies must first be in place to fully utilize AI to its full potential. With a clear vision and some planning, these 3 strategies will help your company keep its competitive supply chain advantage now and over time. While there may be shortcuts to short-term success, there are no shortcuts to creating a legacy.
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