If you gain weight, you buy a bigger belt. Or perhaps you lose a few pounds. But let's go with the analogy of a sizing up your wardrobe. You wouldn't continue to wear the same clothes if you kept gaining weight, would you? Supply chain management works the same way.
After all, if your company is growing and your supply chain management doesn't change to match its new size, things may eventually start to fall apart along the seams. And when that happens, your customers will definitely notice and give an earful to their friends and followers on social media—and your customer service representatives.
So if you're looking for ways to upgrade your supply chain management as your company expands, you may want to try some of these strategies—because the right time to tighten your belt is not when your company is gaining market share.
1. Make sure you have alternate vendors.
You're growing. Are your suppliers?
James Hixson is the founder and CEO of Black Hound Design Company, a custom furniture manufacturing business in Denver.
“Being in manufacturing, supply chain monitoring and improvements are a vital part of our business," Hixson says.
But because his company uses a lot of wood and steel in its production, supply chain management can get complicated, he says.
“The price of steel is constantly fluctuating, and so supply chains must be monitored on a nearly daily basis to ensure that we're getting the best product at the best price," Hixon explains.
“Unfortunately," he continues, "gone are the days when you could work with just one vendor and expect stability in your supply chain. It almost feels like old street markets out there—where you haggle and barter in real time to get the best price."
We have to use precise forecasting of our sales and projects, in order to really dig in on our supply chain needs and think five steps ahead.
—James Hixson, founder and CEO, Black Hound Design Company
According to Hixson, finding reasonable pricing is almost as challenging in the wood industries.
“We use a great deal of beetle kill pine for our restaurant tables, which is a sustainable-harvested wood from the Rocky Mountains," Hixson says. “There is no single vendor or logger who provides all this wood. So we are constantly alternating providers and switching up our supply chain based upon need and availability."
2. Mitigate risk to help your supply chain management.
If you aren't doing risk management when you're updating and improving your supply chain, you haven't really upgraded or improved much. Your supply chain may be bigger, but it may also be more vulnerable to potential problems than ever, says Bob Dixon. (Dixon, a semi-retired consultant based out of Dover, Massachusetts, has a long history of working in logistics and now specializes in global sourcing and supply chain consulting.)
“The best way to manage risk is to be proactive," Dixon says. "This means while you have a supplier who is performing well and meeting all of the key performance indicators, it is critical to have a risk plan on what you will do if that supplier suffers a catastrophic event, financial issues, loss of key personnel or some other event which put at risk your ability to get product."
Every time you make a big change to your supply chain without also implementing a backup plan if something goes wrong, you may be weakening your chain instead of strengthening it.
Dixon recommends, if you can, having a second source for each critical product you produce just in case something does go wrong.
"The second source might receive 15 to 20 percent of the product but is fully qualified to take the entire spend," he says.
“We always have a full stockpile of inventory of raw materials on hand," he continues, "so that in the event of a supply chain disruption, we are still ready to move forward and manufacture our products."
3. Continue to update how you analyze your data.
Are you running out of inventory?
Have you had production or technology problems?
Are the updates in your supply chain management system allowing you to know what's going on in your supply chain at virtually every moment?
The problem may be in how you monitor, collect and analyze information.
“Here's a question every company should be asking: Are we using data to make decisions —or merely to justify our decisions?" advises Shannon Vaillancourt, president and founder of RateLinx, a logistics software provider.
"Companies need to be looking for a software or data services solution that can provide the right data in real time, so their key performance indicators can alert them to potential problems long before it results in an inventory shortage or other serious situation," he says.
Hixson agrees. Keeping up with data is crucial for supply chain management, whether it's going through an update or not, he says.
“We have to use precise forecasting of our sales and projects, in order to really dig in on our supply chain needs and think five steps ahead," Hixson says.
A lot of this isn't necessarily from crunching numbers, he says, but rather having regular clients and talking to them. That helps with "knowing what's coming around the next corner," Hixson says.
Still, his company does a lot of forecasting by looking at industry numbers, keeping tabs on regional and national economic growth and "keeping a finger on the pulse on the restaurant and hospitality industry," two of the company's major clientele. (As you can imagine, a lot of restaurants and hotels use tables.)
If you don't want the tables turned on you, consider looking for ways to upgrade your supply chain as your company expands.
The larger your company gets, the more you have to invest in your supply chain management to keep your executives, employees, suppliers and customers happy. And that can feel like a weight has been lifted off of you.
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