7 Supply Chain Management Best Practices to Implement

It's no secret that today's supply chains have become more complex than ever, with socioeconomic and market dynamics underscoring the need for organizations to respond to a demand-driven inside-out world. Reducing risk and overcoming the many barriers that arise in this complex supply network is no easy task.

There are many different ways that companies can improve their supply chain management to increase operational efficiency, reduce costs, and provide a better customer experience. Below are supply chain management practices that companies can follow.

1. Improve demand forecasting

Having too many or not enough items in stock is a costly problem for companies. The former may mean that inventory is not moving because sales are down or the business miscalculated demand and over-purchased. The second may indicate that sales are up, but supply is lagging, leaving the company missing revenue opportunities. Both are consequences of inaccurate demand forecasting.

Without fail, the best way to improve forecasts is to use automation to calculate these metrics on your behalf. Retailers are always looking for a balance between their inventory levels, warehousing costs, and demand from their customers to prevent stockouts or inventory shortages. With automated inventory alerts, forecasting tools, and cash, merchants can confidently store inventory based on forecasted product demand and/or sales. What's more, making forecasting a priority can simplify inventory counting and reduce excess overhead costs.

2. Use supply chain management platforms

Today's technology plays a significant role in strengthening supply chains. The most successful supply chains incorporate technologies such as ERP software. This automated system can reduce inventory requirements and speed reaction times by improving demand accuracy, creating a nimbler and more reliable supply network.

Cloud ERP continues to play a growing role in the new supply chain. More companies are moving data and apps to the cloud, allowing the creation of unified data models augmented by external sources. This is driving a new level of predictive capability and planning accuracy not available just two years ago.

Validating the trend, more companies see their supply-chain modernization investments bear fruit. Recent research shows that companies utilizing the cloud improved delivery performance and increased revenues by 20%-30% on average.

3. Avoid delays by diversifying supplier relationships

Supplier-side delays are one of the most common reasons for supply chain disruptions. Lack of raw material availability, import/export issues, weather, natural disasters, political and regulatory issues, and other unforeseen obstacles can all slow or even stop supply deliveries.

While it is difficult to predict delays, you can still account for and mitigate these problems. Communication is the main defense. One of the key benefits of having solid alliances with suppliers is establishing open and responsive communication that allows both parties to get in touch as soon as possible once a potential delay is on their radar.

Try to anticipate when a situation could affect a supplier to avoid delays before they become a bigger problem. In addition, invest in inventory management software with predictive analytics to help you know exactly how much inventory is on hand, how fast it's moving, and how much you'll need in the future. 

4. Make purchases in volume to reduce costs

Understanding demand from all business areas and making a single purchase lowers supply chain costs through volume discounts and reduces administrative and warehousing labor costs compared to purchasing multiple supplies. While you can make one-time bulk purchases, there are two other ways to set up volume purchases:

Blanket orders

Blanket orders establish a set price and quantity for a product delivered as needed over some time, often a year. That protects buyers from price increases and can help with inventory stability because you can request additional products when stock runs low.

Standing orders

Standing orders provide the same price protection as blanket orders, but the delivery of supplies occurs in a predetermined quantity on a predetermined date over a specified time. This provides less flexibility than blanket orders but eliminates short-term guesswork and forecasting.

5. Prepare a contingency plan

No matter how well planned your logistics are, disruptions and delays are inevitable. Once the plans are made, the work is far from finished. Your logistics department, or provider, should have possibilities for every element of your plan if something goes wrong. You should also know when to stick with your original plan instead of switching to your backup.

6. Optimize your procure-to-pay process

The procure-to-pay process includes all the steps involved in an order, from request to final payment. This process typically comprises various departments across the company, including finance, sales, warehousing, and logistics, all of which may use different systems to meet their needs. If operations are fragmented, this can pose many challenges: data mismatch, lack of responsiveness, and misalignment of activities.

Addressing this challenge may involve companies automating the procure-to-pay process with a unified platform that can simplify the entire process by handling each step. As a result, everything from vendor management and purchase order issuance to final payment delivery and recording can be centralized and automated, increasing visibility across the cycle, driving key insights, and increasing efficiency.

7. Increase your supply chain visibility

Constant communication, timely updates, and reliable documentation are essential for an efficient supply chain. In addition, businesses need accurate end-to-end supply chain visibility and must take every aspect into account, including suppliers, partners, warehouses, and shipping carriers. 

ERP software allows you to share real-time data across the supply chain, providing a holistic view of the entire chain and more detailed information about each node. This visibility benefit even reaches customers in the form of real-time shipping tracking.

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