Whatever the nature of the business — from consumer packaged goods to online products to pharmaceuticals — the ultimate success of the enterprise hinges on the efficiency of its supply chain. Increasingly complex supply chains can not only be distracting but also costly and a disaster for businesses in competitive industries.
Supply chain participants need to be knowledgeable about inventory control, third-party logistics, sourcing raw materials, operations management, transportation, and a host of other topics. This is why complex supply chain operations need to invest in managed logistics to survive and remain competitive.
Factors Important in Managing Complex Supply Chains
Supply chain professionals are tasked with managing many of a business’s most complex operations. A poor decision can have far-reaching consequences, so it’s important to have a well-thought-out strategy. In creating a supply chain strategy, here are some of the most important factors to consider.
1. Planning and Forecasting
Supply chain managers need to create a working plan for analyzing trends to use for forecasting demand. Plans should be flexible enough to quickly respond to shifts in demand and be able to predict new trends emerging over time.
2. Raw Materials Sourcing
A vital part of managing complex supply chains is being able to procure the raw materials needed for products. Managers must consider various factors in choosing where to source materials, such as cost, quality, reliability, and issues surrounding social responsibility.
3. Inventory Management
Inventory management is an important part of supply chain management. Managers need to be able to manage their stock in a way that keeps costs manageable and availability high by frequently analyzing the popularity of each item and ensuring others are taking up valuable space.
4. Third-Party Logistics
Many businesses now partner with third-party companies to outsource various aspects of warehousing, distribution, and fulfillment services. It’s important for management to ensure it is partnering with trustworthy and reliable partners, and that responsibilities and roles are clearly defined.
5. Shipping and Delivery Logistics
Customers often want to know precisely when their orders are going to arrive, so it’s critical for companies to be able to provide real-time information to meet these expectations. Even when using third-party logistics fulfillment and shipping services, this elevated visibility instills more confidence in the supply chain and allows for better planning.
The History of Supply Chain and Logistics Management
The term “supply chain management” didn’t appear until 1982, when Keith Oliver, a British consultant and logistician, used the term in a Financial Times piece.
Oliver had developed the idea that businesses should view their supply chain as a unified whole when he was consulting with various companies in the 1970s. He noticed that these businesses maintained silos for different areas like production, distribution, fulfillment, and marketing, with each area running independently.
The new concept of “total supply chain management” was the first time businesses considered that these functions should work together. A new approach to logistics began using this concept. More recently, supply chain professionals have started to focus on ways to leverage technology in logistics and supply chain management to improve efficiency and visibility.
Choosing the Right Managed Logistics Partner
Since supply chain issues can make or break your business, it makes sense to choose your partners carefully. If you plan to team up with a managed logistics partner, here are some of the operational challenges they should be able to meet.
1. Network Optimization
When a supply chain network isn’t fully optimized, you’re likely to experience some negative consequences, such as high labor and freight costs, low visibility, and siloed supply chain management.
When you choose the right managed logistics partner, your goal should be to develop a robust strategic approach to the entire process. Key stakeholders should be willing and capable of sharing relevant data to create complete visibility and facilitate more collaboration between partners.
2. Orders, Load Planning, and Shipments
As supply chains become more complicated, it has become more challenging for shippers to manage orders and shipments effectively with internal resources alone. But a managed logistics partner is likely to have many of the resources and processes in place to tackle even the most persistent problems.
Other benefits of using one of these partners is their breadth of experience in the industry and the ability to pool resources. Decisions can be made that lower costs and increase delivery times for all clients.
3. Inbound Programs
When businesses require raw materials and components from a variety of sources, the production and distribution process can quickly become a complex mess. The right managed logistics partner can quickly make sense of inbound vendor requirements and implement any necessary improvements. These improvements might also reduce overall costs and eliminate quality or delay issues that impact customer satisfaction.
4. Payments and Damages Claims
Payment processing issues and damage claim resolution can have a negative impact on your bottom line if not standardized. While these functions can be managed internally, they have the potential to take key players away from the core business.
A managed logistics partner can streamline and automate many of these functions for supply chain partners. Billing and payment processing can be automated as well as reporting that flags any key variances. The system can also identify vendors that may contribute to damage claims so those issues can be quickly addressed.
5. Data Visibility and Reporting
Every business in the supply chain needs better visibility of the entire system to manage expectations and make more accurate business decisions. A managed logistics partner can help make these connections between partners to improve data visibility and reporting.
Many businesses are already using technology solutions like RFID tags and warehouse management systems (WMS). Facilitating more connectivity between partners ensures the availability of useful data to streamline operations and improve overall results.
Because supply chains are becoming more complex, many organizations are looking for ways to access expertise and resources to remain competitive. Many are finding that a combination of the right technology solutions and business partners are helping them improve efficiency, reduce costs, and stay ahead of the typical supply chain disruptions that can harm their business.