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Supply chain management (SCM) has become increasingly important in today’s complex economic landscape. It has definitely been in heavy focus during COVID as the pandemic affected all areas of the complex chain.
With globalisation, inflation, political unrest and rising consumer demands, organisations have to ensure that their supply chain operations are as efficient as possible. This means having processes in place that will enable them to reduce costs, maximise their return on investment, and stay ahead of the competition.
Below are five key overall processes which all companies should consider implementing when it comes to SCM.
1. Demand Planning: This area involves understanding consumer choices and predicting future demand trends. Usually, as a standard, companies use historical sales data to anticipate future customer needs, allowing them to make well-informed decisions about their inventory levels and reduce high stock level risks. This helps organisations meet customer demands while also keeping their costs low. Inventory is usually one of the most important areas as it directly impacts the company’s cash flow. There are also many forecasting tools on the market to implement in order to improve forecasting accuracy, this should highly be considered if the company has a high SKU assortment count.
2. Supplier Management: Suppliers are an indispensable link in the supply chain. It’s vital for organisations to have secure relationships with their supplier portfolio. Doing so can unlock benefits such as, improving order delivery lead time and production and quality standards. Suppliers can also be utilised to source materials at competitive prices, thus reducing costs for the organisation. Moreover, companies can utilise their supplier relationship to expand their knowledge of product and industry information, thus gaining ground on their competition.
3. Fulfilment: Also known as packing and delivering customers their items ordered. It is important to have an efficient fulfilment process to ensure that orders arrive on time and in good condition. In todays’ fast paced and high competition ecom landscape, delivering at the speed of lighting has become expected by the market. To meet these demands, organisations should consider using various delivery options,such as same-day delivery, and different price points to ensure customer satisfaction. According to Amazon, More than half (54%) have abandoned online shopping baskets because of delivery costs.
4. Warehousing: This process includes storing inventory in facilities that are geographically located near customers. This allows organisations to quickly fulfil orders and respond to changes in demand. It is also important to invest in the latest warehousing technology to streamline the process and make it more efficient. However, these are general guidelines. Take the time to analyse what fits your company’s needs. Sometimes a better transportation option is better than opening a new warehouse location and exploring cost savings methods, because a warehouse is not cheap.
5. Logistics: Logistics is the overall process of transporting goods from the supplier to the customer. This journey is never direct, there can be multiple handover points of the merchandise before it reaches the hands of a client. Choosing the right mode of transport, negotiating with carriers for competitive rates, and using tracking systems to monitor the shipment are key components of the logistics area. Just like suppliers, fostering a flourishing relationship can make a world of difference. By optimising these processes, organisations can ensure that products are delivered on time and at the lowest cost.
In conclusion, deploying streamlined processes is key to successful supply chain management, not only in each individual area but making sure the handover process from one link to another is without bottlenecks. By understanding these five key processes, organisations can optimise their supply chain operations, reduce costs, and maximise their return on investment.
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