3 steps to avoid failures in the supply chain

3 steps to avoid failures in the supply chain

Interruption of processes and failures in the supply chain remains a problem that concerns thousands of managers worldwide category.

Looking at the current logistics picture, you can see how supply chains are increasingly faced with new changes, mainly by emerging markets that are continuously expanding.

These markets generate new business models for companies, and thus turn form new opportunities for cost reduction. The danger is that, even though the vast majority of companies prioritize reducing costs in its processes, often leave aside the importance of service quality, which results in risks chain disruptions and management problems.

Manufacturing interruptions, inaccurate or obsolete inventory, transportation delays or problems in deliveries are just some of the risks that organizations must face.

The following are the 3 Best practices to make your supply chain the best in its class.

Optimize your supply chain in 3 steps

1-Considara the total cost of ownership and not just the price:  The total cost of ownership is a calculation method designed to help users and business managers to identify direct and indirect costs and benefits related to the purchasing equipment or programs within companies.

A competitive advantage for companies looking to be a successful supply chain is to change the focus of just looking at the purchase price, to understand the total cost of owning or consuming a product or service. Provide a service that delivers value, rather than reduce costs in every sector of the supply chain will generate long – term competitive advantages.

Successful logistics managers today are abandoning the outdated practice of receiving multiple offers and select a supplier simply what your price . Instead, they consider many other factors that affect the total cost of ownership.

This makes sense considering that acquisition costs represent only between 25% and 40% of the total cost of most products and services, and where the balance of the total, includes operating costs, training, maintenance, storage, quality and transport and the cost of recovering the value of the product later.

There are still many managers and entrepreneurs who, in choosing a service provider transport, care more about what they were charging that the safety and reliability of equipment that the subcontract uses: monitoring the load; It has hired insurance; etc. without considering the serious risks that are running when missing some of these additional components, or are deficient.

Based on the above, it is essential that logistics service providers worry about showing your customers the true meaning of logistics value , and how they should be evaluated its benefits, since it is not easy to convince the executive leadership of a company prioritize value over price.

Since the global financial meltdown in 2009, most executives have focused on reducing costs, quality of service based on the logistics value of excellence.

2-Have better visibility: Lack of data synchronization is one of the biggest causes of failures in supply chains.

Thinking of the current logistics industry, it is important that companies with traditional supply chains take the first step and establish a B2B relationship with outsourced logistics operator that meets the specific needs in the business.

Today, the visibility in the supply chain is defined as the ability to trace, monitor and gather data relevant throughout the process, brindnado the ability to develop and make decisions that can lead to operational efficiencies, increased capacity customer responsiveness and improve response time to unexpected problems.

In theory, as defined by Gartner survey , the visibility in the supply chain from beginning to end  results in :

-Reduced costs by 20%.

Reduces inventory turnover 10 to 7 days.

Improves customer experience and satisfaction levels.

-Agilizar transport process 5%.

Solving these problems properly, it can generate a 24/7 control over all processes in the supply chain, improving or correcting errors in the internal flow of the products, and perhaps more importantly, responding in real time variants demand.

Not having visibility of processes within and outside the supply chain is something you should try to avoid at all costs in this era where globalization is a reality.

“Get real-time visibility across all levels in the supply chain can significantly increase the speed to market, reduce capital costs and better manage risks.” – Jeff Dobbs, Diversified Industrials


3-Collaboration internal and external: Internally, all persons involved in the supply chain must be aligned and focused on the same objectives.

Real-time communication, can make decisions more quickly and accurately, which also helps directly reduce the feared disruptions in the supply chain.

However, external cooperation is equally important. Have a strategic and reliable partner is invaluable to operate a chain of successful delivery.

Working with external transport providers must be a relationship win-win for both companies, where transparency and reciprocity are fundamental to creating a lasting and successful relationship values, and which may benefit both businesses.

Based on the above, it is essential to take advantage of technological advances offered by the industry today. Technology have adequate speed operations supply chain and maximize efficiency.

Currently on the market, they are suitable for the specific requirements of each business software, which have characteristics that are essential to optimize processes in supply chains.

Once visibility of supply chain is reached, the decisions can be made more quickly, thus avoiding interruptions surprising way, and anticipating changes that may arise.

Before making the decision to hire an outside vendor of software as a service, it is important that managers heading evaluate their processes to find deficiencies and then find technology that can meet those needs , that instead of adopting processes that suit the technology , error that often impairs the supply chain as a whole.

In today’s market, customers have become increasingly demanding and want their products quickly, so if a supply chain is inefficient, shippers may not meet demand.

Having a proper strategy to avoid disruptions in processes, you can complement and support the business strategy, reducing operating costs, maximizing efficiency, strengthening partnerships in the supply chain and providing a clear purpose to achieve the objectives set.

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