The importance of simplifying the supply chain

When supply chains are working properly; we rarely hear about them. They operate in the background; ensuring that products reach customers on time.

However; when supply chains encounter problems; they risk becoming big news. We are seeing this in the UK at the moment; with driver shortages and increased bureaucracy causing delivery delays and product shortages. It has quickly become one of the most talked-about issues in the country.

While there may be valid logistical reasons for this; customers are frustrated and just want the problem to be resolved as quickly as possible. Businesses risk losing significant amounts of money; and there is also the threat of potential reputational damage if the company is seen as not dealing with the problem quickly enough.

So how can businesses mitigate these types of risks and prepare their supply chain for the future?

It may seem obvious; but an overly complex supply chain can mean more opportunities for things to go wrong. If a company has to juggle multiple suppliers and processes; there is a greater risk that someone will drop the ball. This can lead to delays in sourcing; manufacturing and shipping; or a lack of visibility.

Complexity destroys efficiency

An ongoing collaboration between Michigan State University and the APCIS Supply Chain Council; called Beyond The Horizons; found that supply chain complexity is one of the biggest challenges facing business leaders.

Operating in a global market often means a greater number of suppliers; which in turn leads to different workflows; different compliance requirements and more vulnerable links in the chain. It is therefore easy for global supply chains to become increasingly tangled and complex.

However; this does not mean that companies should simply accept it. Dan Gilmore; editor-in-chief of Supply Chain Digest; wrote that he once heard a PepsiCo supply chain executive say that "complexity is like a cancer that destroys supply chain efficiency." He is not the only analyst who believes that supply chain simplification is essential for success.

Supply chain simplification is a simple concept in theory. Essentially; it means making the processes involved in delivering a product or service to customers less complicated.

Simplifying your company's processes can not only reduce the chances of errors and delays; but can also lead to cost savings; greater efficiency and a higher quality product. A streamlined supply chain is agile and delivers with minimal waste; making it better equipped to deal with the unexpected. If a business process can be simplified; it often improves overall performance as well. This leads to more consistent quality; lower operating costs; and greater responsiveness.

The combination of these things can result in more satisfied customers; which is the ultimate goal of most businesses. Reducing the steps in the supply chain speeds up the process of getting the product or service to customers; making them happy. And happy customers translate into profits and repeat business. Eliminating unnecessary procedures also eliminates the associated costs; further increasing your profit margin.

Back to basics

Simplifying supply chains may seem challenging at first; especially for a large global organization. But it doesn't have to be; especially if you take a step-by-step approach.

A good place to start is to analyze your entire supply chain and look for areas where it can be simplified. Collin Albrecht; senior director of supply chain at Charter Communications; believes that companies should approach this issue with a "back to basics" mindset. He advises that a good first step is to physically map out the supply chain to get an overview of how it works.

In Albrecht's words; "if it looks like spaghetti on paper; it's probably not good."

A high-level audit of supply chain processes can also reveal areas of concern; such as suppliers offering poor rates or whether "middlemen" are being used when it would be better to go directly. It also allows you to identify opportunities for optimisation; which can help reduce lead times and eliminate unnecessary costs.

Technology is on your side

Optimising and simplifying the supply chain is easier thanks to new technological advances. Machine learning; AI; and automation have the potential to streamline supply chain management operations and help businesses better manage any complexities.

Automating certain operational tasks not only streamlines the supply chain by eliminating unwanted overheads; but also reduces the risk of human error. Furthermore; automation frees up employees to focus on generating value for the business rather than getting bogged down with basic tasks.

Other types of technology that can be utilised include logistics solutions that provide real-time tracking; barcodes that provide up-to-date inventory information at the touch of a button; and forecasting programs that provide instant figures and save time spent manually reviewing reports.

Investing in technology will save your company money in the long run by helping to streamline the supply chain process and reduce inefficiencies within your organization.

Unnecessary data can also burden your supply chain. Manually entering data into different systems is time-consuming and can lead to inaccuracies. Furthermore, storing data in multiple locations; which can be accessed by various people; increases the risk of a security breach.

Eliminating duplicate data entry processes saves time and makes the resulting system easier to maintain; freeing up additional time for employees to work on more pressing projects.

The good news is that you don't have to deal with all this on your own. ERA Group has the knowledge and experience to conduct a comprehensive review of your supply chain and can recommend strategies to optimise and simplify your supply chain processes; increase profits and improve customer satisfaction.