Simple Tips to Understand and Improve Supply Chain Strategy
How well do you understand your company’s supply chain? Unless you have experience with supply chains and have been actively part of its design, odds are, you probably don’t really know all of its bits and pieces – and to understand it, you should start at the very beginning.
Once you understand your supply chain, you may even be able to improve it in various ways. The benefits of improving a supply chain are pretty clear, and if that is the ultimate goal, then these tips should help you to achieve it:
Break the supply chain down into its basic elements
To get started and understand a supply chain, you should consider its most basic elements. Every supply chain consists of multiple parts that involve the manufacture (And in some case assembly), transportation, delivery and storage of inventory. By isolating each part in its most basic form, you will be able to start to see all the components that are involved in the supply chain.
Look at the forecasts
Once you understand the components of the supply chain, the next step to understanding its strategy is to look at the forecast. In general, the supply chain strategy is going to be based on ensuring sufficient inventory to meet those forecasts (plus a certain margin for uncertainty) – so knowing the forecasts that the strategy is based on will help you to understand the strategy itself.
Analyze the supply chain strategy
Frankly, this can be difficult without any prior experience – but it basically consists of looking at the strategy in terms of how it works, what contingencies are in place, and what (if any) inefficiencies are present. No supply chain strategy is perfect, and most may contain several inefficiencies – some of which are unavoidable or even intentional due to the risks of the alternatives.
Attempt to improve the strategy
Last but certainly not least comes the million dollar question: Can the strategy be improved so that it is less inefficient and has fewer redundancies. In some cases that can be achieved by simply updating the strategy in view of a new and more accurate forecast, or in others it may involve engineering parts of the supply chain to incorporate new technology, better communicate with partners, outsource certain parts, or even eliminate areas entirely.
As you can see, there really is a lot that goes into understanding and improving a supply chain strategy. It takes experience and no small amount of skill to do so which is why very often a professional is brought in to help companies do so.
The benefits of getting professional help to improve a supply chain should be clear, as it can help the company save on capital expenditure and reduce operational costs while at the same time also ensuring that customers’ needs are met by adequate supply. In short, it is a crucial element of any business and must be treated as such.