How to identify improvement opportunities in your supply chain
Dean Simpson, a Senior Consultant of Renault-Nissan Consulting, discusses how to identify opportunities in your supply chain.
The term “supply chain”, describes the steps and transactions that take place in order for you to produce goods and ensure they are delivered to the end user or consumer. Usually, this will involve suppliers of materials that help manufacture a certain product. It can also refer to the various stages in a ‘chain’ following manufacturing that lead to a purchase or delivery. An efficient and well-managed supply chain strategy can help your organisation save money, improve customer service and become more profitable, but it’s not always easy to know where to look in order to make changes or improve. The following advice will guide you towards identifying the areas within your supply chain that could be refined.
1. Examine inventory
Any supply chain strategy will include the management of inventory. This includes the parts required to make your products, as well as goods that are being stored, or waiting to be shipped to customers. Reviewing the way in which you manage your inventory can provide opportunities for improvement. You may find that a particular supplier has a longer than average lead time, which causes delays in your chain. Or you might discover ways you could automate the delivery of certain products as and when they are required by the team members at your factory. Any reduction in wasted time or excess inventory will lead to a more streamlined process.
2. Review distribution
Your distribution network includes all the elements, people and suppliers required to get the goods you sell from your production plant to the customer or wholesaler. It will include many of the obvious stages, such as the logistics of transportation. But there may be other less obvious ways you can identify areas for improvement in your supply chain strategy. These include the ordering system you use, the location where you store your products once they are ready and even the route taken by delivery personnel. When you are creating a roadmap for your distribution, you should consider elements such as warehouses – both size and location – your production facilities, convenience for customers, as well as the amount and network of suppliers you work with.
3. Monitor cash flow
Although it might not seem something immediately associated with the supply chain strategy, reviewing and monitoring cash flow can be essential for improving supply chain management. The payments you make or receive need to be carefully co-ordinated in order to ensure the success of your business. This requires knowledge of the payment terms you agree with all suppliers as well as the efficient (usually automated) methods of cash flow management such as electronic payments.
Payment technology is the phrase often used when describing point of sale machinery such as electronic payment devices. It can also refer to equipment used by warehouse staff when delivering, receiving or signing for goods. A thorough review of the technology used and the systems in place to ensure everything runs smoothly is an essential part of any supply chain strategy.
4. Continually review
Being a Lean, efficient and profitable organisation requires continuous improvement and monitoring of the way the business runs. This should not only include the assessment of waste, speed and ‘Just in Time’ production principles, but also the constant monitoring of how your supply chain operates. Rather than a one-off project to identify a road map for your supply chain (although that is useful), a supply chain strategy should incorporate regular checks on the suppliers used, their terms and costs, as well as storage, delivery and manufacturing touch-points.
The most successful and profitable companies see a supply chain strategy as one of the most effective ways of being an efficient, streamlined business, rather than an ad-hoc project. The supply chain holds the secret to many cost-savings and improvements in efficiency, which can have a fundamental impact on long-term success.
If you found this information useful, you might benefit from our recent blog on improving operational excellence by identifying unnecessary processes. Read the article here.
If you’d like to discuss our consultancy services or find out more about how a better supply chain strategy can help you gain a competitive advantage, contact at RNC.info@RNConsulting.co.uk.