Markets and organizations may vary, but supply chains adhere to a standard set of rules to achieve outcomes and avoid issues. Supply chain sin occurs when one or more of these rules are disregarded. The impact or the result of the event can vary. It can range from declining revenues and rising employee unhappiness to insolvency or unhappy customers. If too many irregularities exist in the supply chain, superior products or services will not help a business go too far.
Any supply chain can achieve stellar performance. The prime objective is to attain excellence with exceptional performance in high customer-impact areas. Below is a list of supply chain sins that can degrade a company’s performance. Which ones may apply to your business or organization?
Poor Inventory Management
Effective inventory management can help lower costs and enhance consumers’ service quality experience. However, many organizations lack the necessary personnel, processes, and systems. Inventory levels, deployment, and replenishment must be appropriately managed.
Poor inventory management will result in higher costs or lost sales as supplies go underutilized or inventory remains unsold. When the staff manually hunts for products that are “somewhere in there,” productivity suffers. Such disorganization delays payments and causes oversupply, refunds, stock-outs, or inventory obsolescence. Customers can switch and never return. An effective inventory management solution can help eliminate all such risks.
Insufficient Performance Metrics
While judgment and experience play a significant part in optimizing the performance of a supply chain, it is crucial to have data on the elements that matter. Organizations must define the essential data to assess their supply chain performance. KPIs, or key performance indicators, are a handful of metrics that cover just what an organization needs to know quantitatively. The difficulty lies in selecting the proper indicators. Once they have been chosen, measuring them is typically simple.
Neglecting Cost Drivers
This sin has a sad undertone. It’s disheartening to see organizations leave money on the table by passing up simple possibilities to increase profitability.
How? By being suboptimal. People may be skilled in optimizing their particular functional area of a supply chain, but they do not consider the complete process. Call it tunnel vision or silo thinking, but nobody connects the dots. Such limited vision may result in neglecting tiny changes in one area that may appear insignificant but may permit more significant beneficial changes in another area. For example, accounting may seek to save money by bringing inventory levels close to the lowest possible. Consequently, manufacturing may not respond rapidly enough to satisfy any spike in customer demand, leading to lost sales.
Ignoring Talent
This sin impacts in the longer term. In a world where supply chain performance has become a significant competitive difference, a company must attract and develop new employees’ talents if it wants to succeed.
A company’s supply chain performance and, consequently, its competitiveness will gradually but inevitably decline if it does not invest in providing attractive working conditions and career opportunities for its supply chain professionals.
Inadequate Asset Utilization
Every supply chain should ideally function with the proper resources at the appropriate location and time. As market demand and corporate requirements fluctuate quickly, asset use must be adaptable and optimal. Assets for a business include the labor force, storage facilities, vehicles, systems, merchandise, distribution hubs, and networks. However, too many businesses allow their supply networks to become obsolete. What was well-adapted a few years ago may no longer be suitable for current conditions.
Practical solutions are frequently identified by rethinking and rearticulating the supply chain. Attempts should be made to keep the company nimble and lean in its non-core areas to increase flexibility.
Transport Ineffectiveness
Transporting your products to clients from the warehouse is crucial in the supply chain process. To ensure the best rates and timelines, it is necessary to make the correct choices regarding shipping type (land, air, or sea) and shipping route.
However, without technology-enabled solutions such as a modern TMS on their side, a company is limited to the instant shipping options available (which come at a higher cost). Such solutions can help optimize the entire shipping process and can even assist in establishing long-term relationships with reputable shipping firms that can help create savings on future shipments.
In the current high inflation environment, a company can contain the cost impact with an effective TMS. If you are looking for great Collaborative TMS solutions, Turvo is the right partner. Turvo provides the world’s leading Collaborative TMS application designed for the supply chain. Turvo connects people and organizations, allowing shippers, logistics providers, and carriers to unite their supply chains, deliver outstanding customer experiences, collaborate in real-time, and accelerate growth. The technology unifies all systems, internal and external, providing one end-to-end solution to execute all operations and analytics while eliminating redundant manual tasks and automating business processes. Turvo’s customers include some of the world’s most considerable Fortune 500 logistics service providers, shippers, and freight brokers. Turvo is based in the San Francisco Bay Area with offices in Dallas, Texas, and Hyderabad, India.
