Business owners understand the importance of keeping their supply chain moving forward as efficiently and quickly as possible. But do they truly understand the importance of having a supply chain management plan?
Mark Cuban, one of the most famous sharks on ABC's "Shark Tank" often says that if you don't come in with a business plan, he can't help you.
He would add to that a working supply chain management plan, as well. Without it, it is difficult to be as efficient and forward thinking as you should be. It can also cost you.
Supply Chain Planning vs. Execution
Many times supply chain planning and supply chain execution are used synonymously. But they are not the same thing.
Supply chain planning is the process of planning how you will orchestrate the logistics of your supply system and integrate it with the demand, as well as using the appropriate technologies and SaaS products to keep it running smoothly.
Supply chain execution is the actual carrying out of the plan according to standards of your industry and your company values and goals.
Efficiency and productivity are the keys to keeping up with the needs that your market requires so that you will keep things running smoothly and efficiently for the long term.
Why You need a Supply Chain Management Plan
There are many reasons as to why business owners need a working supply chain management plan.
Without it, you can experience increase waste from mistakes or oversights that are made within the company's order department or supplies inventory department. You may not know how much you are spending on certain supplies, especially if you have several people working on this at the same time.
Communications may be lacking. All of these factors can create problems for your business as a whole. Below are some more reasons as to why you need a supply chain plan.
- Decreases out-of-stock situations and improves customer satisfaction rate
- Cuts down on waste due to failure to plan to spend on raw materials
- Helps increase the supply to meet the changing demand of your products without overspending
- Increases your ROI and revenue (bottom line)
- Enables you to stay on track with productivity goals and improved customer acquisition and order management
Different Supply Chain Management Models/Methods
When orchestrating your plan and implementing the strategies needed to fulfill the need of your customers and the market, you should consider the different supply chain management models that you can use to achieve this.
Below are the most important ways to accomplish your goals with supply chain management.
Data Gathering and Aggregation - The data gathering process must be concise and based on evidence, figures, and corroborating facts that justify the plan you are putting into place. This will keep your operations running smoothly while also satisfying investors as to the validity of your policy.
Increased Visibility - You need to avoid waste and miscalculations when carrying out your supply chain operations. This cuts down on both productivity and overhead when needless mistakes are made that sacrifice the integrity of your operations. By increasing the level of operational visibility, you will be able to tell where you are at in terms of efficiency and production and make adjustments immediately before problems occur that can cost you money.
Lean Principles - The idea of "lean" principles means that you should decrease your inventory cost and only spend what is needed to meet the changing needs of the market and your customer base. Using SaaS solutions and other AI tools, you can keep abreast of what is needed to
Standardization of Processes - Using ERP systems can help save money and time by creating an efficiency and growth plan that works automatically. This also cuts down on mistakes that could be made, especially if several people are working on this at once.
The Planning Process
To create an effective plan for your supply chain operations, it is essential to follow a set of steps to help you reach your goals. They are not complicated but must be considered to meet the needs of your demand and changing market.
- Start with a company overview.
During this stage, you have to consider whether you want to utilize domestic suppliers only, use global sourcing, or a combination of the two to meet the need of your customers. You must compare prices and be specific in how you will carry out your plan.
- Perform in-depth research to determine need and performance.
It is vital that you get all of the facts and aggregate the information together to determine the best plan. Cut corners but not quality and learn how it will work on a daily, weekly, and yearly basis. The cost of operation is what is essential here.
- Address all relevant areas.
Think about which factors in the procurement, sourcing, and distribution process will most affect your outcome. Anything that decreases productivity or increases expense should be avoided unless it can be shown that it will increase your return.
- Develop high-tech options to execute the plan.
There are many SaaS and AI or automated systems available to businesses today that will speed up production while curtailing extra expense and waste.
In closing, business owners need more than a business plan. They need a carefully thought out plan for supply chain management, as well.
By keeping tracking of the production process from idea to manufacturing and distribution, business owners will always know what is going on with their costs and profits because they have their finger on the pulse of the entire process.
Having a supply management plan is easier today than it has been in the past, thanks to the many automation tools and solutions that are available through innovative technologies and tools.
So before you launch your supply chain, take the time to research the solutions that are best for you that will increase your ROI and help your business ramp up without losing your shirt.
Don't Get Left Behind
Schedule a free consultation with Visichain to ensure your supply chain and procurement operations continue to evolve and remain competitive in today's dynamic environment.