5 ways manufacturers can strengthen their supply chains
As the world has become increasingly globalised and tech-enabled, supply chains have grown and evolved too. Manufacturers have had to keep up with the speed of innovation to make sure they remain competitive and don’t get left behind. Add to that the stresses the pandemic piled on factories, warehouses and logistics and you can see how fragile supply chains can be. Your focus now should be on streamlining them.
Manufacturers play a key part in the journey of a product, from material suppliers to retailers, so you’ll have expectations to manage on both sides. A well-organised supply chain keeps your costs down and enables you to adapt quickly to any changes in demand.
With customer expectations at an all-time high, what can you do to boost and improve your processes? Luckily the path to supply chain optimisation is fairly smooth if you follow these 5 principles.
Efficiency is key to success, especially where demand is concerned. Once you know your general peaks and troughs in order volume, you can start improving your supply chain. Firstly, think about where your suppliers, factories and warehouses are located. Are there holidays or events in those areas that could affect a shipment?
If you rely on raw materials or services from China for example, their New Year can put a spanner in the works. Don’t let your supply chain get derailed. Plan these events into your own diary to make sure you get your products delivered on time. It can also help you manage costs so you don’t end up paying for extra storage fees to cover the time in docks or warehouses.
A strong supply chain allows you to make adjustments and receive your items in plenty of time. Being clear on what you need to order and when makes your life a lot easier. If you want more advice on managing seasonal demand, we’ve put together a handy guide here.
One thing business owners know all too well is that simply knowing you need to put in a big order doesn’t mean you can afford to. The gap between buying materials, manufacturing a product and then waiting for your customer to pay can be huge. Part of being organised and smoothing out your supply chain is making sure your cash flow is strong enough to support it. A flex loan, for example, is a useful financial tool you can use to buy the stock or materials you need without compromising on your other outgoings. Find out more about how this could support your business on our website.
Communication, speed and reliability are central to your relationships across the whole supply chain. It’s all very well being organised enough and armed with the right cash flow tools to order materials on time. But it’s no good if you can’t rely on your supplier, or if the retailer you sell to hasn’t got their own stock planning under control.
Do your suppliers answer your emails promptly? Do your customers talk to you about their changes in demand so you can plan in advance? If you know what kind of orders you’ll be expecting, you can make sure you can fulfil them. The last thing you want from a cash flow perspective is too much stock on your hands that didn’t get ordered when you expected. Dealing with contacts that don’t keep you updated about what’s going on makes your job increasingly difficult.
Your lead times will also be affected if someone in the chain is less efficient. If your suppliers don’t get goods to you quickly enough, you might not be able to meet your customers’ order deadlines. Always make sure you’re working with people who have clear and reliable lead times. If you’re not, get out and find someone else.
Here are a few things to ask yourself about your suppliers:
- Do your orders arrive when you expect them to?
- Are there any mix ups or bungled orders?
- How do they respond to errors?
Try checking out supplier listings on sites like Alibaba to find an alternative company that can meet your needs
You’ve probably heard the phrase “supply chain visibility” thrown about. It’s a really important part of understanding your pressure points and snags. In essence, what visibility refers to is how able you are to track every component of your product. If you have good visibility then you’ll know what’s happening with each part in real time.
There are also supply chain management systems, or inventory management software, that can help boost visibility by digitising the process. They allow you not only to see what’s happening at every stage, but also to share your own information with suppliers and customers. Even third-party logistics (3PL) providers will have up to date information on your order. The more each link can see what’s happening in real time, the fewer mistakes are likely to be made. And that means more cost savings for you and better managed deadlines.
Take a regular look at how well your supply chain works for you. You should be looking at lead times, late or unfulfilled orders, price changes and quality dips, to name a few. Do this at least once a quarter to identify any snags and patterns. Knocking these on the head early will save you money and reputation in the long run, so always keep tabs.
If you keep noticing the same problems cropping up, work out what the cause is. There could be a weak link in your supply chain at any point, so don’t rely on one company being good forever. Try to identify where the issue is coming from. Is it your supplier, logistics provider or slipping warehouse standards?
When you’ve worked out why you’re having problems, you have a few options. Firstly if it’s the supplier then talk to them. Explain what’s gone wrong and how regularly it’s happening. It’s up to them to improve if they want to keep your custom. If it’s mishandling at the warehouse that’s causing damage or delays then improve your training for those employees. But if the issue is too critical then you might want to switch provider or supplier immediately.
Often it’s best to stick to what we’re good at. In the long-term, you might see better value for your business if you outsource some of your work. A third-party provider might be better equipped (and faster) than you at certain parts of the manufacturing processes.
Although you’ll pay for their services, the added speed and efficiency could make your product more attractive to customers and put you ahead of your competition. Besides, it means you won’t need to take on specialist staff or machines, which could cost more overall. So you can offer more without the cost of R&D.
The key to a strong supply chain is in the details. The sooner you know exactly what you need and when, the easier it is to fulfil your own orders on time. Improving visibility across the entire supply chain makes this even more straightforward, so share useful information with the other parties.
The best supplier/manufacturer/retailer relationships are ones that prioritise communication and clear forecasting. This leads to an efficient supply chain, which makes everyone happy, including the final customers. It’s the key to gaining and maintaining a competitive advantage in your sector.
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