Supply chain mistakes are costly. The smallest error is amplified due to the sheer size of a supply chain. It is crucial for companies to maintain best practices in supply chain management.
Most businesses make the same mistakes, which leads to disastrous supply chain performance. Companies that pay little attention to supply chain management see increased operating costs, poor customer service and supply chain disruptions.
There are 6 common mistakes that lead to terrible supply chain performance. Simply understanding the bad habits and simple slip-ups and how they affect the supply chain can help you avoid making them:
Operating without proper visibility means many companies make important supply chain decisions based solely off of sales data, which is not nearly enough insight to make informed decisions. You need to know where your raw materials come from, what locations they pass through and where your finished goods will travel. Otherwise, you’re losing efficiency opportunities and risk management capabilities are severely limited.
While supply chain management technology is important for visibility, even the foundation for supply chain optimization, it cannot do everything for you. Sophisticated technology requires a cultural and financial investment for success. Too many companies implement an expensive, complicated system, expecting it to take care of everything, and then become frustrated when it doesn’t. Today’s technology doesn’t allow you to function on auto-pilot – it’s supposed to make supply chain management easier, more effective and give you greater control over what happens.
Supply chain disruptions, depending on the severity of the delay, can cost you millions. Even just a few late deliveries can significantly hurt your reputation. Consistent delays at ports or trouble gathering raw materials can be detrimental not only to your customer relationships but your bottom line. Putting a risk management plan together for various disruption scenarios will reduce added costs on inventory and rushed delivery and keep production moving.
It’s possible, and all too common, to have too many supply chain partners. The more partners you have, the more complex managing the supply chain becomes – decisions have to be shared with more people, communication slows, data exchange becomes sloppier, mistakes are more likely to occur, and your supply chain management efforts become less productive. Keeping the supply chain lean, while maintaining resilience, is the best way to go. Working with fewer partners keeps everyone on the same page.
A company with silos is a company that does not communicate or exchange data internally – this is a huge problem. Companies that operate in silos are inefficient and prone to disruptions. In today’s supply chain environment, your company needs to be able to react quickly, efficiently and cohesively. Companies that take a networked approach to communication and data exchange see immediate improvements in transparency and operational efficiency.
Security is very important when it comes to the supply chain. Vendors are often responsible for overlooking security flaws that can lead to customer and supply chain information being leaked. Since there are so many touchpoints between companies in the supply chain, it is a vulnerable point for most companies. Businesses need to employ secure repositories for sensitive data and have complete control over third-party entry points.
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