Essential Strategies for Improving Supply Chain Efficiency

Editor’s Note: Eamon Francis is the Managing Director at Delta Impact

Having an efficient supply chain benefits all aspects of your business. It makes life easier for your workers and it increases customer satisfaction. The problem with many supply chains is that they are too complex, which can lead to problems such as slow lead times and delivery or production errors.

Problems in your supply chain can be incredibly frustrating for customers and OEMs. These sorts of problems have a ripple effect that touches all aspects of your business. Here, we outline some ways you can improve the efficiency within your supply chain, and the benefits you'll gain from those improvements.

Ways to improve supply chain efficiency

Vendor tail management

Tail management is built on the principle that approximately 80% of the effects (such as profits and sales) come from 20% of the causes (such as customers or products). In supply chains, 80% of your suppliers will account for 20% of your spend.

When looking to improve the efficiency of your supply chain, you need to be focusing on the areas where you will receive the most benefit, such as with your top contracted suppliers and best-selling products. Optimising your tail spend supply can deliver up to 80% vendor reduction while improving efficiency through utilising a single order, invoice and delivery.

Better training

No matter what industry you work in, the proper training of staff is essential if your business is to succeed. Employees who are under-trained often feel dejected and underconfident, as well as being more likely to make mistakes. On the other hand, employees who have received high-quality training and support will not only be more effective at their role, but they will also be better equipped to deal with and rectify any mistakes they may make.

Employee training also reduces the risk of security breaches. IBM's Cyber Security Intelligence Report revealed that 95% of all security incidents involve human error in one way or another. Training staff to understand the importance of cyber security, and the use of any software and IT equipment they may be required to use, will allow them to spot irregularities that may be indications of tampering or malware.

Strategic partnerships

Choosing the right suppliers will go a long way to reducing your lead times and increasing your supply chain efficiency. When choosing suppliers, you should look to create strategic partnerships with companies who are as invested in the final product as you are. This way, your supplier isn't only concerned with delivering your parts, but also with delivering them on time and helping you where they can to ensure the end-user is satisfied.

Strategic partners are those who look to long-term collaboration, knowing that success for either of you will be mutually beneficial. One way that you can work with your strategic partners is to forecast what parts you will need in the future, using sales figures to work out when your high volume orders are likely to come. This ensures that your partners will be able to prepare in advance and have plenty of stock at the times when you need them.

Consistent communication

Maintaining the lines of communication between you and your suppliers, as well as between you and your employees, is crucial in order to make your supply chain more efficient. If you are transparent with the people you work with, they are more likely to return in kind. If you create a culture of honesty within your supply chains, then everyone can feel comfortable reporting when things aren't working.
There may be unavoidable circumstances that increase lead times or limit product availability, but everyone in the chain should be made aware of this, rather than trying to cover that information to avoid disappointment or confrontation. Having an open dialogue also means you are more likely to find quick solutions and alternatives when traditional methods or products are not available.

The benefits of streamlining

Utilising these methods to make your supply chain efficient has many benefits that will help your business. As these methods work towards reducing lead time and avoiding problems with product unavailability, you are likely to see an increase in deadline delivery and, as such, increased customer satisfaction. This, in turn, results in customer return and loyalty.
With improved communication and training, your workforce will be more satisfied, comfortable and efficient. By choosing strategic partnerships and training staff correctly, you are more likely to avoid security breaches and will be better equipped to deal with any security problems that do arise.

All areas of your business will improve if you look to streamline your supply chain. If you think your business isn't operating at peak effectiveness, then this should be the first place to look at making changes.

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