Standardization is Critical to Effective Supply Chain Management
Supply chain management can be a challenge for a lot of companies. Standardization has become one of the most effective methods to optimize the supply chain by ensuring all departments, managers, and partners follow the same procedures and utilize the same tools. This sort of full-chain standardization enables seamless integration between partners in a way that can reduce costs, enhance transparency, and provide the highest customer service to clients.
Whether you have a small business with a clear-cut and local supply chain or a sprawling organization with international partners and shipping, standardizing your supply chain management plan is one of the best methods to enable a high performing team. Contact our team of supply chain management experts today to learn how we can help you standardize your SCM strategies.
What is standardization in the supply chain?
“Standardization” looks different for every supply chain. For some, standardization comes in the form of leveraging blockchain technology. For others, it might be a system-wide standardization of labeling goods. There should likely also be standards for labor practices, social responsibility, and shared long-term objectives.
Essentially, you’re looking to standardize processes to most efficiently deliver goods to your customers. This means smoothening out the procedures from start to finish, so it runs like a well-oiled machine. Standardization maximizes safety, consistency, and quality. It offers seamless integration and streamlined operations that optimize the efficiency of supply chain management.
Advantages of supply chain standardization
Standardization of processes is a must-have for high performing supply chains. According to Learn G2, 79% of companies with supply chain management systems achieve higher revenue growth than those that don’t have an optimization plan. They are able to better deliver to clients while cutting costs throughout the chain. In an industry where lean, fast, and transparent reign as the three pillars, standardization of the system is critical for high performance.
Some of the benefits of standardization:
- Faster turnaround of goods
- Higher revenue generation
- Reduced resource waste
- Lower expenses
- Greater return on investment (for all partners)
- Improved productivity of the entire chain
- Fewer drops in errors, losses, and delays
- Increase in procurement and buying power
- Centralized communication
One of the most valuable advantages of supply chain standardization is the increased collaboration potential. With standard procedures and metrics in place, the supply chain can be much more transparent and thus more efficient and effective.
Organizations that implement supply chain standardization say it creates a chain that essentially “runs itself.” This frees logistics managers to focus on high-level strategy, development, problem-solving, and networking without wasting time on the day-to-day.
How to implement standardization
There are two ways to implement standardization practices and procedures.
First, look at the common and required standards in your industry. What are the laws and regulations that you have to follow in order to be compliant? Furthermore, what are the other standards that aren’t required but highly regarded in your sector?
Second, look at your company’s unique plan. We recommend doing a thorough audit of your organization and supply chain to establish where you currently stand to give an indication of a forward approach. Consider your supply management system, stakeholders, communication frequency, communication modes, and technologies. Most importantly, consider your business’s objectives and use your standards to meet those goals. For example, if your organization values worker safety, you’ll need to consider how you can implement new health and safety standards.
Keep in mind that no company is an island. Your supply chain partners will need to be on board with the standardization to ensure consistency and uniformity. Consider first focusing on supply chain network optimization to improve transparency and communication between partners.
Standardization in practice
One of the most effective ways to improve your business performance is standardization. However, one of the most expensive ways to hinder your organization is by attempting standardization without a plan for implementation and utilization. Supply chain management can make or break you, which is why leveraging the right standards, in the right way, with the right parties is critical to success.
That’s why so many businesses choose to work with a 3PL. A third-party logistics provider already has a set of industry standards in place as well as an experienced team who can customize your supply chain management plan.
Redwood Logistics provides supply chain consulting to bring the most innovative and effective solutions to every area of your supply chain. We can help you create standards and management techniques for all areas of the chain, including:
- Transportation procurement
- Integration and architecture design
- Freight and network optimization
- Business process design
- Supply chain network design
- Process analysis
- Cloud and enterprise architecture
- Connectivity and data processing
- Training and onboarding standardization
We’re not a one-size-fits-all 3PL. Our experienced team performs in-depth analysis to create custom solutions built to address your supply chain’s unique challenges.
Interested in seeing how Redwood Logistics would implement standardization in your supply chain? Reach out to us for a free initial consultation to get started!