A supply chain can be the difference between a successful business and one that struggles to stay afloat. For procurement companies in the United States and sourcing companies in the US, streamlining your supply chain can lead to improved efficiency and better customer service, as well as cost savings that can be reinvested in the business itself. Use these seven tips to improve efficiency in your supply chain.
1) Start small
If you already have a solid source of suppliers, don’t go out and try to find new ones just to meet a quota. Instead, focus on working with those suppliers more effectively so that they work as hard as possible on your behalf. Ideally, when you start a relationship with an existing supplier, you’ll already have experience with their company and feel comfortable enough with them to take care of business efficiently.
2) Focus on key metrics
To determine how efficient your supply chain is, you must first identify what key metrics to track. One useful approach is to focus on inventory turns—how many times a product or commodity rotates from incoming raw materials or components to finished goods and then back into inventory again. Inventory turns are calculated by dividing net sales by average inventory and multiplying by 100: Net Sales / Average Inventory x 100 = Inventory Turns. Just because the numbers are high doesn’t mean they’re good.
3) Reduce cycle time
By investing time upfront to improve your supply chain, you can reduce your overall cycle time. Fewer delays will allow you to get your product or service to market faster and more efficiently. This is important not only from a financial perspective (shorter supply chains are less costly), but also a customer experience one as well.
4) Test, then scale up
Before you invest in new infrastructure, there’s one simple test you can perform to see if it’s worth scaling up: ask yourself if your business would make more money with a slightly longer supply chain. If so, then it’s time to bring on a specialist. Identify which resources are most essential and tap into existing procurement experts who have built their businesses around filling those specific gaps.
5) Use data science to predict demand
Data science is becoming a critical part of optimizing supply chains, as it offers insights into consumer demand and purchasing trends. The rise of AI and machine learning has given way to a new breed of software that can crunch data on purchasing patterns and sales forecasts to offer real-time predictions about demand. Many companies are already looking at improving their data collection efforts as well as adopting AI solutions for their supply chain. For example, sourcing companies in usa.
6) Automate your processes
If you’re going to outsource any of your operations, try to automate them first. This will allow you to hand over all or part of your processes without having to worry about whether they’ll be properly followed. By automating, you can formalize what was previously informal and turn loose those who do not need full-time supervision. A common example is procurement companies in usa to find supplies at better prices than you could achieve by looking online yourself—in that case, once they have a working relationship with vendors and know your needs well enough, it makes sense to hand off some of your sourcing responsibilities so that the partner can manage everything on its own.
7) Communicate internally efficiently
It may seem obvious, but you’d be surprised at how much time is wasted when employees and departments don’t communicate with each other. To streamline your supply chain, get everyone on board and work together. Create a supply chain team and task force to help organize internal communication. Send emails that list relevant tasks and deadlines, ask about progress updates every day, have regularly scheduled meetings where you can all sit down and talk about what’s happening in your corner of the company, etc.