3 Keys to Strong Supply Chain Management

Supply chain management plays a key role in the success of any business. Building a strong relationship with your suppliers within your supply chain will allow you to strengthen your overall performance in your core marketplace. A well-managed supply chain will result in increased customer satisfaction, reduced cost, better quality, and better service from your supply chain.

The first thing that needs to be understood is that a supply chain is not just the company that you purchase your materials from. A supply chain is a complex system connecting everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.  One of our goals in supplier management is to gain commitment from our supply chain to assist in the support of our operations.

The Link

A supply chain can be thought of as a literal chain “linked” together via flows of goods and information. The physical flow of goods involves the production, movement, and storage of products and materials. And, as crucial as physical flow is, information flow is just as important. Information flows allow the various supply chains to coordinate their long-term plans and to control the logistical flow of goods and materials up and down the supply chain.

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Managing Relationships

Managing the relationships within your supply chain is critical. It can affect all aspects of your supply chain and have a major impact on performance outcomes. Supply chains can easily break down due to poor communication when expectations are not clearly outlined. It is easy to assume that relationships within the supply chain will fall into place once systems are established, however, the reality of managing the many different personalities within the supply chain system is perhaps the most difficult part of supply chain management. This is why it is key to develop partnerships within your supply chain that you trust are meeting the expectations agreed upon. Every part of your supply chain must work in conjunction with the others in order to successfully move products or services from supplier to customer.

The way businesses interact with their suppliers and customers has drastically changed over the years thanks in large part to technology, communication, and the need for transparency. A company must be willing to help all parts of the supply chain to succeed in order for themselves to succeed and gain profit. The days where you held all information about yourself close, are gone. It has been established that it is better to share your strategic and operational plans with your supply chain network. By doing this and showing the trust you have put in these partners they are more apt to make better aligned decisions.

Metrics

A successful supply chain management must implement information systems and metrics that focus on performance across the entire supply chain. Individual units that seek to increase their performance with disregard to the impact on the macro level can cause problems in the supply chain. For example, if one part of the downstream supply chain acts to minimize its inventory levels, it may not realize that it is impacting the delivery performance to the end-user. You can communicate these metrics by issuing KPIs (key performance indicators) for each area of the supply chain. The KPI’s should include the following:

• On-time delivery
• Quality
• Cost

A supply chain is a complex system. A well-managed supply chain will result in increased customer satisfaction, reduced cost, better quality, and improved service from your supply chain.   

Conclusion

Several factors go into successful supply chain management; from understanding the flow of your supply chain, to managing the relationships within the supply chain. In order to encourage this success and diagnose what drives the supply chain, monitoring and measuring the key performance indicators is required. Supply chain management plays an integral role in business and due to its complexity, one must have high regard for their supply chain in order to run a successful business.