Supply Chain Advice
International suppliers are always dealing with pressure to deliver products faster and cheaper, but a weak link in the global supply chain can cause headaches and missed opportunities for your business.
If you buy from suppliers, there are steps you can take to ensure that your products are available as planned and that your inventory supply is protected. Consider these tips for managing and strengthening a global supply chain.
Redundancy is a key factor in creating an effective supply chain with efficient inventory management. It is fine to have one supplier that you rely on heavily, but always have at least one backup.
In addition to helping solve production issues when necessary, working with alternative suppliers can give you leverage in negotiating competitive pricing. It also helps you to push out new inventory quickly, as you can get quotes from all suppliers and see who can ramp up the fastest.
While cost will be an important factor in choosing a supplier, look for a company you can build a good relationship with, not just the one with the cheapest price. If you treat your suppliers as business partners, they’ll be more willing to meet your tight production and delivery schedules. Keep the lines of communication open, and plan an in-person meeting occasionally so you feel a personal connection.
Set Clear Expectations For Buying Schedules
Ideally, try to provide your suppliers with an annual schedule showing overall purchasing projections and periods of heightened demand, so that they can be ready. Being able to inform suppliers of your anticipated purchasing schedule requires accurate sales forecasting and inventory tracking. As part of a two-way communication channel, your suppliers should provide you with regular updates of their inventory data.
Establish Useful Supply Chain Metrics
The first step to creating reliable metrics is to find supply chain software customised to your industry. Don’t just use spreadsheets for tracking, and don’t purchase a generic solution to save money. Spend time researching what others in your industry are using and look for a tailored solution. Odds are that software catering to your needs will offer the ability to track metrics you find useful.
Once you have a good system in place, you can start to collect the information you’ll need to track metrics such as cash to cash cycle time, fill rate, inventory turns, return on working capital, and DPMO. Focus first on metrics you can benchmark both internally and externally, then determine if these meet your needs or you need to create additional metrics.
The goal is to enhance inventory accuracy by making your product always be traceable. Create a system where no inventory is ever moved without it being authorised and tracked. Automated technologies such as voice-directed warehousing (VDW) and with tracking technologies such as RFID make this goal a reality, while also paying huge ROI dividends through increased worker efficiency.
Work With An Representative To Oversee Foreign Suppliers
If your company is not large enough to have a full time overseas manager, you’ll want to find a reliable global supply chain management consultant, and may also want to work with a licensed customs broker. The key is to find someone who has expertise in the country where your supplier is located and spends a lot of time there.
A supply chain consultant should help you vet international suppliers, deal with tax law, and navigate logistics and export regulations. A customs broker can help facilitate communication to avoid governmental red tape, and deal with laws and regulations for importing shipments.
Maintaining a strong supply chain involves maintaining relationships with suppliers and consultants, keeping meticulous records, and using metrics and sales forecasts for accurate predictions. If you can create a climate of continuous improvement in these areas, you’ll experience more-reliable supply fulfilment and reduce downstream strain on your business.
For more information about how our products can positively impact your supply chain operations, get in touch today.
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