Business owners need to optimize their supply chain model and mitigate modern-day business challenges like high inflation rates, rapidly evolving customer demand, unexpected disasters like COVID-19 and lack of coordination in business processes. All out of these factors point to the fact that only businesses with lean and agile supply chain management processes can deliver high customer value and dominate the market.
Because “one size fits all” doesn’t work for all manufacturing industries, business organizations must align the SCM process to their production process. The main objectives of aligning the supply chain with production are to:
- Meet customers’ demands on time
- Reduce operation costsminimize material wastage
- Offer the best customer service
It also helps organizations improve customer loyalty and sustain their business.
Top ways to align your production and supply chain processes
1. Invest in the right software solutions
By investing in solutions like inventory management software, warehouse management software, shipping software, etc., business organizations can streamline the supply chain management process. These tools enhance collaboration among different constituents of the supply chain process and reduce redundancy levels from it. Whether it’s tracking the shipment, locating the item in the warehouse, procuring goods, paying bills or enhancing workplace safety, these tools are helpful in optimizing the supply chain process.
2. Forecast product demand
The market is volatile, and if enterprises can’t supply products as per the market demand, it could become challenging to stay in business. It’s essential that business enterprises forecast the product demand accurately and supply goods accordingly. Again, tapping the list of inventory management software or supply management software backed with predictive analytics can be valuable for forecasting product demand. Based on the data, the manufacturers can produce goods and avoid a situation like deadstock and shortage of stocks.
3. Use advanced technology
Organizations should use advanced technologies like IoT, blockchain and cloud computing. Using IoT devices at various facets of the supply chain, from spare parts maintenance to monitoring storage conditions and collecting data throughout the supply chain, completely transforms supply chain management. Likewise, blockchain and robotic automation are becoming popular in the supply chain to enhance its performance.
4. Collaborate with internal and external stakeholders
The supply chain involves many people like manufacturers, distributors, suppliers, employees, etc. Smooth collaboration and active involvement of internal and external stakeholders can help to eliminate the gap in the supply chain process. Whether it’s taking the approval of stakeholders or coordinating with internal team members on the purchase order process, it’s a must that all the stakeholders are tightly integrated with the supply chain management.
5. Connect with multiple suppliers
Relying on a handful of suppliers can impact the business, especially during a crisis when they aren’t functioning at their full capacity. In such a scenario, business owners must stay connected with a large pool of suppliers and manage the list of standby suppliers to respond to business needs during a crisis.
6. Optimize supply chain visibility
Supply chain visibility is essential to avoid errors like double-ordering or delays in procurement. It’s necessary that every person in the supply chain, including 3PL providers, have access to the same data and see the movement of goods from production to last-mile delivery. To optimize supply chain visibility, tools like supply chain management software or inventory management can be pretty helpful. It gives a minute-to-minute update about the entire supply chain process.
7. Customize supply chain model to business needs
Supply chain processes could vary based on the industries; for instance, the healthcare industry has different supply chain requirements than heavy equipment production factories. Understanding the business requirement and aligning the supply chain requires strategic planning. Business enterprises need to customize the supply chain model to business needs. The best approach to customize the supply chain to business needs is to settle with the basic supply model initially and gradually customize it as the business expands its operations.
8. Risk management
Aligning production and supply chain is imperative, but finding the risk associated with the production is equally important. Shortage in raw materials, storage, and transportation, product quality, legal risks, etc. are the risks associated with production. To identify these risks, business owners should create a risk management plan that includes identifying and documenting risks, building a supply chain risk management framework and monitoring, reviewing and mitigating them.
9. Circular supply chain
As an initiative to cut the costs of raw materials and their easy availability, many organizations are replacing linear supply chains with circular supply chains. In the circular supply chain model, the waste products are broken down and recycled into raw materials. Customers today prefer products that are environmentally friendly and have minimum impact on the environment.
10. Train employees
One of the biggest issues faced by the supply chain in the manufacturing industry is the lack of a skilled workforce. Aligning production with the supply chain process can make sense only when there are skilled workforces to manage the business functions. This issue can be mitigated by training the supply chain workers and giving them access to real-time knowledge resources to upgrade their skills.
Business operation efficiency depends on how efficient their supply chain process is. But business enterprises have undergone significant changes due to digitalization, consumers’ higher expectations and globalization. This makes the supply chain process complex.
To survive these new shifts and trends, manufacturers need to overcome the challenges of the traditional supply chain process. Modern-day manufacturing industries have realized that by aligning production with supply chain processes, they not only overcome the challenges of traditional SCM but also save costs on its operation.
Modern supply chain processes are data-driven, and software solutions play a key role in aligning production and supply chain processes. This helps the supply chain process to go from reactive to proactive.