Recently, I was asked by someone new to the industry for a list of “best practices.” “A ‘no-brainer,’” I said to myself. So many supply chain practitioners talk about best practices, I knew it would be relatively easy to find a list. And I was correct. The problem was not a lack of lists, but an overabundance of lists of best practices for everything from technology, clearing customs, and warehouse operations to the automotive, chemical, and food industries. What I was unable to find after calls to several educators, consultants, and other experts was one simple generic list that might apply to supply chains in general.
I realize that one size does not fit all, but thought it might be helpful as a guide toward developing specific best practices to develop a brief generic list. The following represents my attempt to do so.
- Develop a supply chain strategy
Excellent supply chain management doesn’t just happen. A good strategy will outline the role of the firm’s supply chain, its objectives, and the tools and processes that will be required to achieve them. A good old fashioned SWOT analysis will be very helpful.
- Manage your transportation spend.
While other supply chain functions may seem more glamorous, transportation is the major expenditure for virtually all firms. (62.5 % of total U.S. logistics costs in 2014.) Manage it wisely.
- Understand and manage global business rules.
In today’s global economy, the best supply chains will have a strong foundation in customs rules, cultures, and currencies of countries around the world, or at a minimum, those in which they intend to do business.
- Establish and maintain relationships with logistics service providers that add value.
The outsourcing of logistics services continues to increase, and justifiably so. As the logistics service provider (LSP) industry continues to mature, selecting a qualified partner and maintaining a good relationship with that partner can be an extremely effective method of managing the supply chain. However, it is important to select a partner that can add value to the process, not necessarily the one that affords the lowest cost.
- Create visibility to all supply chain activities.
Order status, inventory availability, shipments in transit, and other SCM activities should be visible on demand regardless of which partner is involved. The pipeline must be visible from beginning to end.
- Embrace new technology and discourage manual information gathering and management processes.
In providing visibility and managing other aspects of the supply chain, use the latest technology wherever possible, utilizing the internet wherever practical.
- As we become more dependent on technology do not lose sight of the human relations skills, i.e. collaboration, cooperation, consideration for associates and partners.
This will be critical to the successful management of the supply chain.
- Use inventory as a tool and manage it effectively.
While global shipments may extend the supply chain, effective visibility to, and management of inventory will help offset the longer transit times and facilitate the placement of inventory where it is needed at the time it is required.
- Establish KPI’s and measure supply chain performance.
Set goals and measure the performance of critical supply chain metrics. Keep the number at a reasonable level, measuring only those things that are important to the efficient management of the function.
- Maintain employee and customer-friendly physical operations.
A firm’s distribution facilities will be only as good as its employee performance, customer service, and ability to move products in, out, and away from the facility efficiently and economically.
- Diligently maintain good relationships with supply chain partners.
Whether dealing with carriers, LSP’s, or other partners on whom you rely, the importance of quality, open relationships cannot be overemphasized.
Asking the question, “What are the best practices in supply chain management?” is a little like asking, “How high is up?; but hopefully, the above list can serve as a guide to developing your own.