Robust supply chain management (SCM) is critical for ensuring any manufacturer’s growth and success, something that even companies with a modest supply chain strategy recognize. That’s why so many manufacturers and vendors commit a significant portion of their annual IT spends on buying and administering SCM software – an expenditure that’s growing approximately four percent annually and doesn’t appear to be diminishing, according to SCM industry analyst AMR Research.
We discussed some specifics for optimizing SCM in a recent blog post, but it’s such an important topic it bears revisiting to cover some of the more general aspects of SCM that can affect how well it’s utilized. Without proactive and comprehensive SCM, you run the risk of:
- Too much raw material and overstocked warehouses impacting profits
- Too much inventory in centers with insufficient demand; too little where demand is peaking
- Insufficient inventory shortening production runs, starving distribution centers, and missing customer orders, or
- Product shortages causing shelf stock-outs that reduce sales and customer satisfaction
Here are some tips to not only improve SCM functionality, but help ensure its success:
Get stakeholder buy-in
Efficient and effective SCM is an information pipeline that runs through a variety of internal departments such as purchasing, customer service, production, and warehousing, and extends to external vendors and distributors and logistics providers. Any weak link in the supply chain will affect the entire chain, so it’s important to identify and fully involve each and every SCM participant. That means getting their input and feedback on how well your SCM processes function for them and what changes or improvements will make SCM even better. When workers have a say on how a process such as SCM functions they begin to “own it” and put it to better use.
Integration is crucial
Once you have stakeholder buy-in you, of course, have to make sure all those various departments and participants are reliably integrated. Supply chain best practices include properly integrated SCM software across multiple units and platforms for seamless functionality and efficiency. Without proper integration, you end up with a bunch of independent operational siloes trying to coordinate with each other.
Collaborate, collaborate, collaborate
What makes SCM such a powerful business optimization tool is the ability it provides users to seamlessly communicate and share data in real time between internal teams and external partners. If companies are not fully leveraging SCM’s capability to do this, then they will never realize the full benefits of truly optimized supply chain management.
To learn more about creating and implementing a successful SCM strategy, download our white paper, 5 Characteristics of a Competitive Process Manufacturing Supply Chain.