5 Tips for SMEs Setting up Supply Chain Management

Supply chain management (SCM) is a vital procedure within business operations that monitors a product’s development and consumption. For those who are unfamiliar with this process, it is the planning and management of the flow of goods (or services) from the point of origin of raw materials to the site of consumption, commonly known as ‘last mile delivery.’ It also includes all of the actions and processes that occur between these two places, such as transportation, storage, and replenishment.

We’ve seen how COVID-19, the novel coronavirus outbreak, has impacted global supply chains in recent weeks and months. Because of the amount of individuals, countries, and worldwide companies affected, the repercussions of global pandemics or other public health emergencies can have significant supply chain impacts, upending regular operations at every stage of the manufacturing line.

SCM is a critical component of every successful firm, as any successful business owner can tell you. It fosters good communication and connections with suppliers, assisting in the avoidance of shipment delays and the reduction of logistical errors. Efficient SCM increases your negotiation strength, allowing you to obtain the best rates and items in the shortest amount of time. As a result, your inventory expenses are reduced, and your operations’ overall planning and efficiency are improved.

All of the aforementioned assures that your company can provide excellent customer service while also achieving significant financial success.

Small businesses offer advantages that larger corporations do not necessarily enjoy. Large, long-established supply networks can be wasteful and inefficient, and employees in larger companies may not comprehend or know how to enhance their own supply chains.

According to Deloitte, above-average supply chains result in above-average revenue growth in 79% of the organisations that have established them. In comparison, only 8% of organisations with below-average supply networks had similar revenue increase.

Clearly, staying on top of your SCM is critical, but it can be challenging at times. So, to assist you, we’ve compiled a list of five crucial suggestions to help you remain on top of things.

1. Find Reliable Suppliers and Rate Them

It is impossible to overstate the importance of finding the appropriate suppliers. The cost of a provider is not the sole consideration when selecting one. What is more crucial is to choose dependable vendors. This enables you to fulfil your commitment to provide the finest possible quality to your consumer. It is critical to conduct extensive research to discover those with a solid reputation for upholding high standards for quality, customer service, packaging, and ethical business practises.

Interviewing suppliers utilising Carter’s 10 Cs of Supplier Evaluation is a fantastic approach to vet them. On a scale of one to ten, rate them in the following areas:

Image Resource: https://sanzubusinesstraining.com/carters-10c-evaluation-model/

1. Competency: They have a proven track record of success
2. Capacity: The number of orders they can handle
3. Commitment: Their dedication to you and your quality standards
4. Control: Their command over their own procedures and supply chain
5. Cash: Their financial strength, including liquidity and positive cash flow
6. Cost: Their prices in comparison to those of similar vendors
7. Consistency: Their capacity to consistently produce the same products and quality
8. Culture: Their core values
9. Clean: Their concern for people and the environment
10. Communication: Their quality and methods of communication

2. Invest in Employee Development

Any SCM employee will tell you that running an efficient and streamlined SCM is like running an obstacle course on a daily basis. Each new day presents its unique set of problems to solve, especially when dealing with expensive, fragile, or perishable commodities.

Staff development options include not just a formal training curriculum, but also on-the-job training, coaching, mentorship, rotation through numerous tasks, and scenario modelling training. All of this helps employees understand not only how processes work, but also how they affect the business.

3. Organisation is Key

Make decision on products you want to sell based on what has previously sold successfully and your objective. You need to have an understanding of what your customers truly want, including feedback and support.

Calculate the expected demand for each product. Prepare specific numbers to provide to potential vendors. List all of the parts, materials, or completed goods you require, as well as the quantities you would order from each provider. For example, if you know your red, white, and blue sunglasses sell best in May, June, July, and October, collaborate with your supply chain partners to ensure you have enough supply to satisfy demand.

Planning around your suppliers and other elements, such as region, is also part of good supply chain management. For example, if you work with a Chinese vendor, you may need to manage your purchase order timing to account for the two-week holiday season surrounding Chinese New Year. This ensures that your items arrive on time and helps you save money on your supply chain (because you won’t have to pay extra storage fees while your products languish on a pier across the ocean).

When launching a new business, the most efficient strategy is to keep your planning simple and traditional. Keep things simple rather than creating intricate formulas for everything, as the way you operate will change very rapidly as your firm grows. As a result, you will collect more data on a constant basis, which will be used to optimise your replenishment process. When ordering from many vendors, schedules and spreadsheets can be handy. Additionally, create checklists for the critical supplies that are required for your daily operations so that business activities are not slowed.

4. Understand your Replenishment Timeframes

A company that does not have enough stock to sell can suffer greatly, especially if it is new and only sells a limited number of products or services. Having half your range out of stock frequently means losing half your revenue, so knowing how long it takes to replace your stock, paired with a sound manufacturing process, is critical for any product-based firm. Even service-based firms need to plan ahead of time to ensure adequate resources to carry out the services promised.

5. Diversify Supplier Relationships to Avoid Delays

One of the most common causes of supply chain interruptions is supplier-side delays. A scarcity of raw materials, import/export issues, weather and natural disasters, political and regulatory issues, and other unforeseen barriers can all hinder or even halt supply delivery.

While it is difficult to forecast delays, organisations can account for and manage these issues. The primary line of defence is communication. One of the primary advantages of good connections with suppliers is the ability to build open and responsive communication that allows both parties to reach out as soon as a potential delay appears on their radar.

Anticipating when a scenario may affect a provider is critical to eliminating delays before they become a major issue. The threat of imposing taxes on goods from a supplier’s country, for example, could drive businesses to seek alternative suppliers or make bulk purchases before the new regulations take effect.

Finally, the best method for firms to overcome supplier delays is to invest in supply chain software with predictive analytics that can reveal exactly how much inventory is in stock, how quickly it is moving, and how much you will require in the future. Furthermore, diversifying your sources can aid you when you anticipate a delay by giving you something to do about it.

Final Thoughts

There is yet hope if you are dissatisfied with the performance of your supply chain. Focusing on selecting dependable suppliers and logistics providers, ensuring supply chain sustainability, and facilitating the flow of information throughout your organisation can go a long way towards lowering costs and increasing customer satisfaction. Remember that this is a process, and the ultimate goal is constant progress.