How to Diagnose the Weakest Point in your Supply Chain
These are essential components of modern business operations. A supply chain refers to the network of organizations, resources, activities, and technology involved in creating and delivering a product or service to customers. Logistics, on the other hand, involves the planning, implementing, and controlling the movement of goods, services, and information from the point of origin to the point of consumption.
It includes everything from the raw materials used in production to the final delivery of the product to the customer. It encompasses a wide range of activities, including sourcing, procurement, production, transportation, warehousing, and distribution. The goal of supply chain management is to ensure that goods and services are delivered to customers efficiently, effectively, and at a low cost.
Logistics, meanwhile, involves the planning and execution of the physical movement of goods and information throughout the supply chain. This can include everything from transportation to inventory management to order fulfilment. Logistics plays a critical role in ensuring that products are delivered to customers on time and in good condition.
Every chain of supply is as strong as its weakest link. That is why the steps taken to efficiently get products and services from point of origin to customers at a considerable cost and in the best condition are key components of a successful logistics network. In other words, the effective management of a company’s logistics network is instrumental to its overall success in relation to lower operating costs, customer satisfaction, and long-term financial health.
In view of the foregoing, the focus should then be on how to strengthen every component of the Supply Chain by identifying and better managing those points that constitute the likely potential to weaken the entire supply chain. The following are some of the several ways of effectively managing your supply chain to diagnose the weakest point and guarantee a more efficient Supply Chain:
Create Performance benchmarks: Having performance benchmarks for every aspect of your Supply Chain is the most important step for tracking the performance and identifying potential or existing weak points. That way, the performance of employees, vendors, suppliers and all relevant parties in your Supply Chain is measured at planned intervals to spot performance gaps and recommend improvement actions.
For instance, if you are a manufacturer, the key components of your Supply Chain that must be tracked or measured will include your source of raw materials, the supplier, the third-party Logistics vendors, your Warehouse and Inventory Managers, the local distribution system and your Information Technology/Communication systems. Once this is effectively done, potential weak points or risks are identified and addressed with improvement actions.
Engage A Competent Third-Party Logistics Provider: When key aspects of your Supply Chain are outsourced to Third-Party providers with core competence in those areas, they will help in diagnosing the weak points or potential risk(s) within your Supply Chain, offer professional advice on how to eliminate or better manage those risks; how to better manage logistics cost and get supplies across to your customers within agreed timelines.
Obtain Customer Feedback: Bearing in mind that the goal of every chain of supply is customer satisfaction, you must create several channels of obtaining feedback from your customers weekly, monthly or at suitable intervals. This could be through a satisfaction survey, post-delivery follow-up calls, emails or organized face-to-face meetings. Carefully analyse this feedback with your team because they usually contain a lot of information on performance gaps, areas of satisfaction and areas that require improvement.
Leverage the Most Efficient Technological Tools: Technological software for production planning, end-to-end seamless flow of information, warehousing, inventory forecasting, barcoding, and scanning to distribution, have made Supply Chain Management more efficient and easier to track performance and diagnose weak points in your Supply Chain.
Track Adherence to Terms & Conditions of Service: One of the best ways of guarding against the potential weak point of non-adherence to contractual obligations is the ensure, among other measures, that the following are observed:
- Constant engagement of third-party vendors and suppliers at planned intervals for clarifications on issues pertaining to service expectations, cost control, and delivery schedules in your logistics network.
- Joint team-building sessions focused on service requirements to ensure that the expectations communicated are clearly understood and accepted by your team and the selected third-party provider.
- Constantly monitor and control processes and procedures addressing interactions between all third-party agents and your logistics team and track potential gaps capable of becoming weak points in your logistics network.
The ability to track potential or underlying weak points in your Supply Chain is a critical success factor in Supply Chain Management. The import of this is to ensure that every link in the Supply Chain is as strong as the others in a bid to achieve one collective goal – Customer Satisfaction.