Practical tools for supply chain
Supply chain management (SCM) has been tested to its limits in the past few years with global events like the pandemic, Brexit, and the USA’s relationship with China all presenting challenges for the chain.
In March 2021, the Ever Given, an ultra-large container vessel (ULCV) became stuck in the Suez Canal, blocking the way of dozens of other ships carrying goods. This created yet another crisis for supply chains across the world, with the repercussions still being felt. These are just some of the factors that have led to backlogs in the supply chain and with a shortage of workers and a spike in transportation costs, the issues do not look like they will subside in the near future.
What are the elements that go into SCM to ensure smooth supply chain performance and how might we prepare for fluctuations and disruptions? Companies like Amazon which rely on a global supply chain have been able to future-proof themselves in some ways by using automation and machine learning for optimisation. The analysis of purchasing data helps them with demand forecasting and therefore supply chain planning, but AI is used across all departments to gain a competitive advantage. Customer satisfaction is high on the agenda for Amazon and so investing in this kind of continuous improvement has been key to their success as supply chain leaders.
Supply chain management systems can help tighten up all business processes across the life cycle of the product and contribute to a robust supply chain strategy. The market is filled with software options that can support supply chain processes to run more smoothly from procurement through to final delivery. Whichever solution a business chooses to use, it will provide practical tools for management strategies in the value chain.
Shipping alerts
With the shipping of products and raw materials often representing the first step in the chain, real-time shipping status alerts and updates are crucial in maintaining lead times. The larger the company, the more likely there will be different types of cargo shipped to customers and suppliers around the world. As logistics tools go, a simple alert to a mobile phone flagging either delays or successful shipping can make all the difference to decision-making stakeholders.
Inventory management
The just-in-time (JIT) inventory model, which has served industry well over many decades, is no longer suited to an unpredictable world still recovering from factory shutdowns in 2020. Lean inventory management has picked up where JIT left off with the aim of reducing surplus and waste, eliminating redundancies, and being ready for customer demand. Lean inventory management uses demand forecasts, materials planning, and scheduling and simulation tools.
The return on investment includes a streamlined labour force and less need for warehouse space, while maintaining service level.
Warehouse management
Using lean inventory management takes pressure off warehousing, but tools are still needed to help optimise day-to-day operations at this pivotal point in the chain. A warehouse management system offers visibility of the entire inventory and manages supply chain fulfilment operations from the distribution centre to the store shelf or end customer.
Advanced supply chain planning tools allow businesses to handle complex logistics related to receiving, tracking, cycle counting, and route planning over multiple warehouse locations.
Operations management
In smaller organisations, supply chain management and operations management are likely to overlap. However, operations management focuses more on internal processes that rely on the external processes of supply chain management. Operations management requires tools to help with coordinating production, pricing, sales, and distribution. It also includes finance activities like managing budgets. The management of staff, work scheduling, and assigning duties falls under operations. Combined with this is forecasting from data, including customer demand, so that decisions can be made on productivity.
Performance management
Supply chain performance management analyses what supply chain management indicators, metrics, processes, and technologies are most effective. This is carried out by analysing qualitative measures including customer satisfaction and the quality of the products as well as quantitative supply chain KPIs like the time a product takes to get delivered (aiming for OTD or on time delivery). There are five key performance attributes: reliability, responsiveness, flexibility, cost, and asset management.
Transport and logistics management
Transport and logistics tools are vital for efficient routing of inventory and tracking from one location to the next. Having an overview of the logistics means that multi-stop trips can be planned, shipments can be consolidated to maximise space, and less than load (LTL) shipping can be planned. Inventory tracking allows issues to be spotted and resolved as they arise, for example inventory slowing down may need re-routing.
Supplier management
Entwined with procurement management, supplier management also takes in cost issues and helps a business better understand their relationships with suppliers. Looking at historical interactions can show how these affected performance indicators. By analysing the data and assessing the suppliers’ contributions, the business can get a clearer idea of whether they need to change suppliers or maintain a relationship. Supplier management tools will also provide a centralised platform to perform bids, auctions, and negotiations.
Demand forecasting
Advances in data analysis mean that the amount of data that can be processed by computers is so much more vast than what any number of analysts could ever manage in the same amount of time. This gives access to insights into past performance, but also valuable forecasting information. Essential information regarding production planning, workforce management, and supplier relationships contribute to the decision making needed to meet future demand. Without forecasts, businesses risk stock shortages during periods of intense demand like Black Friday or Christmas. On the other hand, when demand runs unexpectedly low, businesses run the risk of taking on costs and potential losses they could’ve otherwise avoided.
These are just some of the areas where the supply chain can be optimised, but as supply chain management becomes more complex, there is the option for businesses to outsource their supply chain management. Outsourcing means that a business can focus on developing their products or services. Meanwhile, supply chain management specialists help to create a roadmap that takes into account sustainability and pairs revenue growth with higher performance. It’s an increasingly viable option for businesses whose expertise is not in SCM.
How to master supply chain management
The world of logistics and supply chain management is at a pivotal point where innovative initiatives in restructuring are needed to keep global trade and the economy functioning. With economic and political challenges set to continue and the climate crisis a major factor in creating sustainable supply chains, the old template methodology no longer works.
If you’re inspired by the need for fresh management strategies that can change the supply chain landscape, the 100% online MSc Management with Supply Chain at the University of Lincoln could pave the way for your new career. Find out more about the skills you could gain and how to apply today.
