When it comes to improving a business’ inventory performance, interrogating the supply chain can be an intimidating prospect. Supply chains are complicated and difficult, and the prospect of change typically provokes a reflexive ‘if it isn’t broken, don’t fix it’ response. Businesses see the upfront pain but fail to recognise the profit on the backend.
A ‘back to basics’ approach to reviewing the supply chain and stock control processes can help identify poor supply chain performance, particularly in terms of inefficient processes or wasted resources. As inspiration for your organisation’s own deep dive, let’s look at some of the key areas where businesses can improve stock control to increase efficiency and reduce costs, maximising profits long term.
Maintaining a tech edge
Technology is an important part of most businesses stock control procedures, and without that tech, most businesses would fail to meet ever-increasing customer expectations. Although an organisation’s stock control processes may work adequately now, businesses that take a forward view and invest in the next generation of inventory tech now are more likely to maintain a competitive edge going forward.
Looking ahead into the future and allocating adequate resources to improve the supply chain can pay off remarkably quickly. For example, early adopters of RFID within the supply chain have been able to track their flow of goods right from the production line to the end customer, and have been able to harness data on how the supply chain is functioning to enable future improvements. Similarly, cloud software has reduced software costs, lowered the barriers to good inventory practice and improved many businesses’ ability to scale up.
Streamline processes and physical environments
Productivity within the supply chain is important for both equipment and employees. Businesses should carefully identify any inefficient or unnecessary tasks which prevent their people from achieving their best. Physical environments should also be reviewed to see if there are literal obstacles that employees or machinery face in order to improve flow on the factory floor.
Reduce unnecessary touch points in the supply chain
Many supply chains involve moving products between warehouses or distribution centres on their way to the final customer, whether that is a retail customer or a wholesale warehouse. Businesses should review their stock control practices and movement of their goods within their supply chains to identify if there are opportunities to reduce the amount of touch points goods travel through. Generally, each touch point is a delay in connecting the customer with their product and an increased cost for the producer. Many of these are necessary, although reviewing warehouse locations, distribution centres, and retail locations may allow for touch points to be decreased. Technologies like RFID can assist in highlighting inefficient touch points.
Identify opportunities for third-party support
If your business is in brewing beer, you may not know a lot about logistics, or how difficult connecting your product with a customer 1000 kilometres away on a different country may be. Businesses should identify areas where it may be advantageous to use third party logistics providers. This may be as a complete supply chain solution. Alternatively, you might engage additional capacity as an extension of an in-house supply chain when required in order to meet changing demand trends.
Another area in which external suppliers can be of assistance is in supplying equipment to be used in the supply chain as capacity changes. An example of this is leasing trucks as demand requires so that equipment is not being underutilised. However, the risk of using third-parties is that they must be reliable and financially stable so that the suppliers’ reputation is not at risk.
Most, if not all, of these innovative practices, will become virtually mandatory for businesses to remain competitive in the increasingly competitive environment. That said, reviewing the supply chain now will enable businesses to embrace change sooner leading to increased efficiency and decreased costs while giving them a jump on their competitors.