“Leaders win through logistics. Vision, sure. Strategy, yes. But when you go to war, you need to have both toilet paper and bullets at the right place at the right time. In other words, you must win through superior logistics.” – Tom Peters
Let’s face it, supply chains have seen a tricky few years. From the complications and changes in regulations imposed by Brexit, the challenges caused by Covid-19 pandemic and the devastating consequences of the Russian invasion of Ukraine. Tenacity has been the name of the game to make sure goods reach their end user.
62% of companies have limited visibility of their supply chain and 15% only have visibility on production (Blue Ridge). Yet 57% of companies believe that a well setup supply chain management could give them a competitive edge that enables them to further develop their business (Zippia).
The need for slick operational efficiency has never been greater.
What is a supply chain management system?
A supply chain system consists of a series of interconnected activities that are designed to produce, distribute, and deliver products and services to customers. The process starts with the sourcing of raw materials, which are then transformed into finished products through various manufacturing processes. The finished products are then transported to distribution centres, where they are stored until they are needed. Finally, the products are shipped to retailers, wholesalers, or directly to the end-users.
What is the key to a successful supply chain management system?
The key to a successful supply chain system is effective coordination and collaboration among all the parties involved. This requires careful planning and management of the various stages of the supply chain process, from sourcing to delivery. This also includes the effective management of inventory levels, transportation, and logistics.
To also explore what KPIs can do to drive performance, view here.
Types of Supply Chain Systems
There are several types of supply chain systems, each with its own unique characteristics and requirements. The three main types of supply chain systems are:
- Lean Supply Chain System: This type of supply chain system is designed to minimise waste and maximise efficiency. The focus is on reducing inventory levels, reducing lead times, and increasing the speed of production and delivery.
- Agile Supply Chain System: This type of supply chain system is designed to be flexible and responsive to changing customer needs and market conditions. The focus is on rapid product development, short lead times, and fast delivery.
- Resilient Supply Chain System: This type of supply chain system is designed to be robust and adaptable in the face of disruptions or unexpected events. The focus is on building redundancy into the system, diversifying suppliers, and maintaining a flexible and responsive network of partners.
How to build efficiencies into supply chain management systems.
There are several ways to build efficiencies into supply chain management.
- Use technology: Technology can automate and optimise many supply chain processes, reducing manual effort and errors. Consider using tools like warehouse management systems, transportation management systems, and order management systems to streamline your operations.
- Adopt lean principles: Lean principles focus on reducing waste and maximising efficiency. By adopting lean principles, you can improve the flow of goods and information through your supply chain, minimise inventory levels, and eliminate non-value-added activities.
- Implement supply chain visibility: Supply chain visibility allows you to track inventory, shipments, and orders in real-time. This helps you identify bottlenecks and inefficiencies in your supply chain and make data-driven decisions to improve performance.
- Collaborate with suppliers: Collaborating with suppliers can help you build stronger relationships, reduce lead times, and improve the quality of goods and services you receive. By sharing information and working together, you can improve supply chain efficiency and reduce costs.
- Monitor performance: Regularly monitoring performance metrics like on-time delivery, order accuracy, and inventory turns can help you identify areas for improvement in your supply chain. Use this data to continuously optimise your processes and reduce inefficiencies.
Perhaps consider how a new Enterprise Resource Planning (ERP) software could wrap a lot of these efficiencies into one fully visible platform. An ERP can streamline and automate business processes; improve customer satisfaction; increase collaboration opportunities; provide more accurate and useful reports; and improve data security. If you want to read more about how and ERP system could improve your business efficiencies, then you’ll want to check out this blog.
Why are supply chain management systems important?
Effective supply chain management can have a significant impact on a business’s success. By optimising the supply chain process, a business can improve its efficiency, reduce costs, and increase customer satisfaction. Here are some of the key benefits of effective supply chain management:
- Improved Efficiency: Effective supply chain management can help businesses streamline their operations and reduce waste. By optimising the flow of goods and information, businesses can minimise delays and reduce costs.
- Reduced Costs: Effective supply chain management can also help businesses reduce their costs. By minimising inventory levels and reducing lead times, businesses can save money on storage, transportation, and other expenses.
- Increased Customer Satisfaction: Effective supply chain management can help businesses improve their customer service. By ensuring that products are delivered on time and in good condition, businesses can increase customer satisfaction and loyalty.
- Better Risk Management: Effective supply chain management can also help businesses mitigate risks. By diversifying suppliers and building redundancy into the system, businesses can reduce their exposure to disruptions or unexpected events.
Supply chain systems are a critical part of the production and distribution of goods and services. Effective supply chain management can help businesses improve their efficiency, reduce costs, increase customer satisfaction, and better manage risks. By understanding the basics of supply chain systems and the different types of supply chain systems, businesses can design and implement a supply chain system that meets their unique needs and requirements.
To also learn key trends affecting supply chains and logistics, view our blog here.
Supply chain management systems can be a complicated beast, but we’re here to help! Get in touch today for a chat with one of our expert consultants and start making your supply chain work better for you.