5 SUPPLY CHAIN MISTAKES TO AVOID IN 2020
The supply chain is the backbone of the manufacturing, retail and distribution industries. In the current challenging economic environment, running a lean supply chain is crucial to keeping your business afloat.
“Supply chain operations are under pressure to adopt new business models and technologies to excel in an increasingly complex and volatile world. Supply chain leaders must identify where to innovate and invest in new processes and technologies to help their companies remain relevant in their markets.” – C. Dwight Klappich, Vice President Analyst – Gartner
Staying competitive requires supply chain professionals to implement innovative solutions to effectively manage complex challenges while simultaneously reducing operational expenses.
We compiled a list with the main supply chain challenges that we’ve recently encountered and some pointers on how to resolve them, so you don’t start off 2020 on the wrong foot.
1. Lack of visibility
The increasing complexity of supply chain management has brought to the forefront the need for transparency throughout internal processes. Visibility is crucial to understanding, identifying, changing and executing many aspects of a business. When applied to Supply Chain management, it means having access to large amounts of real-time data for monitoring and managing end-to-end performance.
Identifying when and where operational changes are needed is not an easy task. Without visibility, small problems can slip through the cracks of everyday routine and escalate into larger issues. If managers can’t visualise small root issues, they will likely struggle with solving the major problems they caused.
Therefore, end-to-end supply chain visibility is key to maximizing efficiencies and mitigating risks. One way of achieving a wider picture of your supply chain is to regularly review current operational data, report and compare with historical information. Seek technological solutions that will give you access to reports focusing on metrics that drive tangible operational improvements and deliver real-time information.
2. Too many product touches
Product touch is a supply chain term that describes how many times an item is physically handled from receipt to shipment. Every time a product gets touched your company incurs costs. A lean approach means minimising as much as possible the number of touches in every step of the supply chain.
“The speed of today’s economy demands increased productivity and efficiency. To achieve this, the concept of reduced touchpoints must extend into all facets of business, including the supply chain.” – Forbes
However, to improve productivity and reduce unnecessary product touches, you’ll need… visibility! The ability to map and track the full journey your items travel from receipt through storage to packing and shipping is paramount to implement streamlining strategies.
Fewer touches mean less room for human error, thus higher accuracy and efficiency. Accuracy in picking, packing in shipping means fewer returns. Efficiency means faster order turnaround windows and prompt shipping.
3. Carrying excess inventory
The ability to meet customers’ needs all year long is crucial to a business’ success. However, purchasing inventory is a constant risk that companies undertake, as seasonal demands fluctuate and play havoc with stock levels. For example, some companies do the best part of their sales in the last quarter of the year during the holiday period while others could have their sales dependant on weather or specific events.
In order to prepare for that, a business must carefully and effectively manage its inventory levels observing seasonal variations to avoid storing unnecessary items as well as running out of popular ones, especially if they’re promising next-day or same-day delivery!
Demand forecasting means predicting your inventory requirements. There no easy one-size-fits-all formula for demand forecasting. Each business has its unique set of SKUs, pricing, sales channels and seasonal fluctuations to account for. Automating your supply chain can give you access to sophisticated algorithms to accurately calculate demand forecasts.
4. Using paper-based systems and processes
For fear of missing and not controlling, many companies have a very manual approach to their stock. Others are weary of investing the cost of implementing a supply chain solution, unsure if they will achieve a significant ROI. However, the benefits of an autonomous and intelligent supply chain far outweigh the costs involved in implementing a supply chain solution.
To maintain adequate stock levels, you need to have a full understanding of how much inventory you have as well as how much you will need to fulfil upcoming orders.
While data analysis has always been an important part of supply chain management, manual data like paper spreadsheets and shipping manifests takes time to be compiled and analysed. In an increasingly fast-paced industry, this approach is simply no longer sustainable. Prompt and accurate forecasting and planning are crucial to responding to clients’ demands and ensuring profitability.
5. Poor space utilisation
The overall cost of running a warehouse has a significant impact on a business’ bottom-line. At the core of an efficient warehouse lies a carefully designed racking system that considers vertical space as well as ground dimensions. Managers need to be vigilant when planning and designing storage solutions, to ensure that the facility’s floor space is utilised to its optimal capacity.
When planning the configuration of your racking, you need to start by observing and documenting all aspects of your warehouse’s day-to-day procedures. Your operational processes will drive your storage design. Additionally, while it might be useful to research existing warehouses’ configurations, bear in mind that what works for another business might not necessarily work for yours. The best way to maximise your storage and get the most out of your racking is to install a system that is specifically designed for your operational needs.
A Warehouse Management System (WMS) helps you control all aspects of your operations including storage and utilisation of floor space. Often, WMS can make valuable recommendations such as changing your product slotting philosophy away from conventional product value-based ABC categorization toward often counter-intuitive yet highly efficient methods like floating inventory warehouse layouts.
iWMS is an independent software developer, innovator and team augmentation partner with years of global experience in consulting, building, and supporting WMS solutions. We offer proven industry-leading software from Körber Supply Chain Solutions for warehouse and supply chain management.
iWMS is based in South Africa, the Americas, Australasia and India.This gives iWMS access to the best resources and IT talent globally enabling us to ensure that the right level of experience is available for all projects at any given time.
Please contact us if you are looking for a warehouse and supply chain management system service provider for enterprises.