Any company that relies on inventory or equipment will have a supply chain – a sequence of steps required to source items from various suppliers. A supply chain is also a term used to describe the network of manufacturers, distributors, and retailers that handle products from start to finish on their way to the end consumer. By both of these definitions, the central component of your supply chain is, of course, your supplier(s). So, you might think that optimizing your supply chain is as simple as choosing the right suppliers, right? While that’s certainly important, here are nine tips you can use to further optimize your company’s supply chain management:
1. Bring in a Leader Who Specializes in Supply Chain Management
If you’re running a small business or startup, you can probably handle the initial duties that come with creating and managing a supply chain in the beginning. However, if your company is processing a high volume of transactions and you’re at the stage when it has become impractical for you to handle everything yourself, you might want to consider hiring a manager who has a degree in supply chain management. The very fact that there are degree programs that revolve entirely around this concept lets you know how pivotal it is for business success. If you want to take a more hands-on approach, you could earn an MS in supply chain management online.
2. Use Spreadsheets and Databases to Keep Track of Suppliers
If you’re a retail company that regularly orders and stocks thousands of products, keeping track of all of your suppliers and making sure everything is in stock can become incredibly difficult without an organized system in place. The most basic and straightforward way for most people to get started is to simply create a spreadsheet with all of the necessary fields.
3. Use Supply-Chain-Management Software and Web Platforms
When you’re ready to go beyond keeping spreadsheets, or you need a more user-friendly approach, try using a supply-chain-management software (SCMS) to streamline the process of recording and retrieving all data related to your company’s supply chain. Another interesting approach is to use eCommerce extensions for platforms like WordPress and Shopify to automatically update stock and price information across your entire catalog.
4. Consider Reviews and Ratings When Vetting New Suppliers
As you begin to expand your supply chain, it’s imperative that you avoid doing business with questionable suppliers and manufacturers. Making this mistake can lead to costly mistakes related to poor product quality, slow shipping times, unfulfilled orders, and other mishaps that can damage your brand’s reputation and hinder the expansion of your company.
5. Use Optimal Shipping Services
Ensuring reliable shipping is another aspect of supply chain management that requires attention to detail. Fortunately, once you’ve gotten into a system of using a certain carrier and shipping service, this is a relatively easy component to maintain. Still, it will require some initial effort in that you may need to compare the shipping times and costs of multiple carriers in your area to determine which one is the most cost-effective for each of your suppliers.
6. Create a Contingency Plan
If something goes wrong with your supply chain, you need to be ready to respond with a backup plan immediately. This means having alternate suppliers on standby so that you can have orders fulfilled when your main supplier is out of stock or experiencing other issues. Any time you’re importing products, you could run into an odd issue with customs or other shipment delays, so preparing a contingency plan ahead of time will ensure that such problems don’t damage your company’s reputation and revenue on short notice.
7. Keep a Surplus Reserve Stock for Certain Items
Ideally, you should never be in a situation where you’re unable to fulfill orders for your hottest selling items. Of course, staying in stock all the time is easier said than done. Plus, some might argue that the goal of doing business is to sell out of your inventory. However, while running out of stock or overselling has a bright side in that it shows you’re getting a large number of sales, ultimately, it’s a bad thing because it stops you from profiting from new orders. Thus, try to establish a reasonable reserve stock for your hottest items to make sure you can keep them in stock in between shipments.
8. Have System of Checks and Balances
Problems can arise when there’s a lack of accountability in your supply chain. The easiest way to create a system of checks & balances is to have managerial employees regularly double-check each other’s work to confirm accuracy and validate data. Essentially, you’re less likely to deal with issues when there’s more than one person responsible for maintaining the continuity of the supply chain.
9. Practice Routine Quality Control Inspections
When you’ve been dealing with a supplier for a while, it can be easy to become complacent in your arrangement and let your guard down. When that happens, product quality can start to suffer without you taking notice until a dissatisfied customer or client lodges a complaint. Instead of waiting until the product quality is poor enough to justify a negative review or rating, be sure to conduct frequent quality control checks on every shipment to take a more proactive approach to customer satisfaction and reputation management.
10. Consider Using Financing to Fund Inventory Orders
If you find that you’re investing a lot of your company’s available capital into keeping the supply chain running, you might benefit from using invoice factoring and other inventory financing methods to fulfill orders without dipping into your own cash flow. While this approach would slightly reduce your overall profits due to interest, it also takes the burden off of your company’s bank accounts.
Every Retail Business Owner Should Learn Supply Chain Management
In closing, if you own or operate any kind of retail business, it would be in the best interest of your company for you to become a specialist in this area of operations.