Supply chain management is a critical process within business operations that oversees the development and consumption of a product. For those unsure of what this process consists of, it is the planning and handling of the flow of goods (or services) from the point of origin of raw materials all the way to the point of consumption, also known as “last mile delivery”. It also encompasses all the steps and processes in between these two points including transportation, storage, and replenishment, which will be the focus of my tips below.
1. Understand your replenishment timeframes and processes
Not having enough stock to sell can really hurt a business, especially when you are starting out and only have a small range of products or services to sell. Quite often having half your range out of stock means losing half your revenue, so having a solid understanding of how long it takes to replenish your stock, combined with a solid manufacturing process is crucial for any product-based business. Even service-based businesses need to plan ahead to ensure sufficient resources to carry out the services being offered.
2. Organisation is your best friend
When starting a new business, keeping your planning simple and traditional is the most efficient approach. Try to keep things simple instead of making complex formulas for everything, as you will find that the way you operate will change very quickly as your business develops. As a result of this, you will consistently collect more data which will be used to further improve your replenishment process. Schedules and spreadsheets can be useful when ordering from multiple suppliers. Additionally, creating checklists for the important supplies that are needed for your daily operations so it doesn’t slow down business operations. Finally, try ordering raw materials or specific products on specific days of the week and supplies on other days.
3. Understand your freight profile and choose the right carriers
Choosing the right transport company (or companies) for your business should start with understanding what you are sending and receiving. No transport company is a one-size-fits-all solution, although nowadays there are many online freight broker type businesses available that may be useful. Identify the patterns in your own business. For example, if you are sending the same item every day to specific locations, it would pay to work on a tailored transport solution for the long term. You might have just one transport provider for incoming stock or rely on suppliers to deliver goods to you, but it is important to have several options including a very reliable carrier or a backup option for sending items to customers as any delays in order fulfillment will inevitably lead to customer complaints.
4. Invest in an inventory management system
Properly managing your products and inventory is just as important as having enough product to sell and having a reliable means of delivery. Investing in an inventory management system will ensure that you avoid issues such as incorrect dispatching, spoilage or shrinkage which can result in cancelled orders, customer complaints, and ultimately, financial loss. If you are running an e-commerce business, your shopping cart might have a simple inventory management system that you can start with and build upon.
5. Perform regular cycle counts
You must ensure that you update inventory regularly with incoming stock counts and fulfill orders quickly once they are dispatched. Practice regular cycle counts on fast moving lines to identify issues before they affect customer orders. A cycle count is simply a physical count of certain products to help improve inventory accuracy and avoid overselling or having products that that go unattended for a long period of time. Remember to reduce items in pending/unfulfilled orders from your counts before entering data into your system.