We regret to inform you that Serai will be winding down all operations.Despite a huge amount of progress made by the team, it has proven difficult to build a commercially viable business. As a result, we’ve made the difficult decision to close our doors.
We are grateful to our customers, partners and colleagues who have supported Serai since its inception.If you have any questions, please contact [email protected]
An efficient and effective supply chain management strategy sets successful businesses apart from their competitors. It may seem overwhelming but creating a successful supply chain is possible with research, technology, and practice.
What is Supply Chain Management? And Why Is It Important?
Supply chain management moves products from their source to distributors for manufacturing and eventually the final customer. The overall management of all the links incorporated in producing and transporting goods and services is crucial. A supply chain management strategy is significant in product customization, quality control, cost reductions, and speed-to-market.
Implementing and following a smart supply chain management strategy is more important than ever. The Global Supply Chain Pressure Index (GSCPI) has increased exponentially since the start of the pandemic in 2020. The GSCPI uses big data to measure backlogs, delays, delivery times, and more to determine how healthy the global supply chain is. Since instability on the worldwide level is inevitable, planning and controlling your individual business’s supply chain operations is crucial.
Logistics Management vs. Supply Chain Management
Shippers often confuse “logistics management” and “supply chain management.” Supply chain management is the overarching umbrella that directs activities such as logistics and distribution. Every function falls under supply chain management, from planning to delivering and returning. Logistics management involves only moving and storing products.
Your business’s logistics and supply chain management strategies will be different, but they go hand-in-hand. Therefore, to have a successful supply chain strategy, you also need a successful logistics strategy and vice versa.
Best Practices for Supply Chain Management Strategies
A solid supply chain management strategy should clearly define objectives across all supply chain stages to maximize value. Your supply chain management strategy will be influenced by the industry you compete in, business value propositions, internal decision-making, and overall business goals. As a result, any business can apply a few best practices to its supply chain management strategy to improve its bottom line.
Align Supply Chain Responsibilities
In many companies, decision-making power is divided, which slows down operations. When this power is divided among so many people, everyone loses control of the supply chain, and a high amount of communication is needed to make any decision quickly and accurately. While dividing power in an organization has its benefits, communication is often absent.
Executive management, like the CFO, should oversee supply chain decisions to advance communications. CFOs have the potential to influence decisions since they are in a corporate-level position heavily; they should be the most knowledgeable of the entire supply chain. In addition, executive leadership involved in the supply chain can help consolidate the power division that slows down decision-making.
Collaborate Internally and Externally
Internally, everyone in your organization should be on the same page and focused on the same goals. Cohesion amongst employees in any department is crucial. With so many moving parts and linking activities in a supply chain, internal collaboration is even more critical.
External collaboration is also key to success. Having a trustworthy supply chain partner proves invaluable. Often, companies share technology and information when their supply chains are dependent on one another. For example, a manufacturer may implement a formal supplier management strategy to better collaborate with their supplier. In this way, both businesses benefit.
Take Full Advantage of Technology
The right technology will speed up supply chain operations and maximize efficiency. Find software that’s right for your company and has critical features for your business. One of the main benefits of adequately implementing advanced technology into your supply chain strategy is end-to-end supply chain visibility. A Transportation management system (TMS), for example, assists in booking, tracking, and invoicing freight shipments. Technology such as a TMS allows you to see your operations processes, identify inefficiencies, and implement changes efficiently.
Put Value Over Price
Providing a valuable service, rather than cutting costs at every point of the supply chain, will be better for long-term business goals. Choosing the cheapest supplier and procurement options may be tempting, but it’s not the best strategy. Massive corporations such as Amazon and Walmart have obtained economies of scale and mass production’s economic cost advantage. Therefore, it’s impossible to compete for the lowest cost. Providing a quality product or service will attract and maintain customers more effectively.
It may not be easy to get company leadership on board with this idea, but putting value over price will satisfy your customers, keep business flowing smoothly, and make you a reliable supply chain partner. Producing quality products and services is the best way to build brand recognition and respect amongst customers and potential business partners. The value-added will trump the initial cost savings in the long run.
Take “Green” Initiatives Seriously
Consumers consider environmental impact when purchasing goods. No matter what industry you are in, operating a sustainable supply chain will not go unnoticed. A 2019 study showed that 47 percent of consumers had switched products due to social values. Implementing green logistics into your business’s supply chain strategy will please your customers, create a positive brand image, and boost company morale.
Obtaining awards and joining programs promoting sustainable business operations proves to customers that your business takes environmental concerns seriously and is not greenwashing. For example, shippers, carriers, and 3PLs can join a program sponsored by the EPA called the SmartWay Partnership. PLS Logistics is a member of this program and has significantly reduced shippers’ and carriers’ carbon footprints while saving them money.
How a 3PL Can Improve Your Supply Chain
If your supply chain operations are becoming too overwhelming to handle in-house, outsourcing may be the right option. Outsourcing your supply chain needs to a 3PL can save your organization time and money. In addition, having an expert business partner to assist with logistics and transportation functions allows you to focus on what matters most to your business. So, get a quote today from PLS Logistics!
A supply chain strategy is a formal approach to managing the network between an organization and its suppliers. A supply chain manager usually develops this strategy with the primary goal of maximizing value across all stages of the production cycle.
As you’ll see in this article, supply chain planning requires a delicate balance of efficiency, resilience, and alignment with the overarching business strategy. But before we dive into specific tactics, let’s take a step back.
What is a supply chain strategy?
A supply chain strategy is like a roadmap that helps companies get their products to customers with as little friction as possible. This plan ensures that every phase of the supply chain is optimized, including the sourcing of materials, manufacturing, delivery, and logistics.
Four factors usually influence an organization’s supply chain strategy:
- Industry
- Company value proposition
- Internal decision-making processes
- Business goals
As the global market becomes more complex, proactively establishing a supply chain strategy is critical for any business that turns raw materials into finished goods. This includes industries such as manufacturing, retail, construction, and wholesale or distribution.
The term “supply chain” was innocuous for decades—until it made global headlines in 2020.
Supply chain management (SCM) lessons from the COVID-19 pandemic
In the past, making supply chains “lean” was a popular strategy for leaders, meaning the priority was to minimize waste to deliver products as fast as possible. However, the COVID-19 pandemic prompted supply chain leaders to shift their focus from efficiency to resilience to withstand global volatility.
Increasing your supply chain’s resilience may not be particularly cost-effective in the short-term, but it’s a risk many organizations are willing to take to ensure long-term profitability. According to a survey by Gartner, just 21% of respondents said their network was “highly resilient,” referring to the ability to adjust sourcing, manufacturing, and distribution activities quickly. However, over half of respondents expect to increase their supply chain resilience within 2-3 years.
So, what can supply chain leaders do to bolster their supply network? Here are five strategies to consider for 2021 and beyond.
4 supply chain strategies for 2021 (with examples)
If you’re concerned that your supply chain process is vulnerable to demand surges, shipping difficulties, or other external factors, consider these five strategies:
1. Place buffers along the supply chain
Strategically placing buffers can help organizations absorb the impact of unexpected delays. There are three types of buffers you can implement along the supply chain:
- Inventory: Keep safety stock or buffer stock to protect against delays or demand surges (this is the most common buffer since inventory can be easily tracked and controlled in real-time with inventory management software).
- Time Buffer: Materials arrive before demand to protect an upstream or downstream process or delivery point.
- Capacity Buffer: Leverage underutilized space like warehouses or production facilities.
2. Diversify your manufacturing and sourcing network
As supply chain disruptions have intensified over the past decade, procurement directors are realizing relying on a single source to get products is risky. For example, in 2011, natural disasters in Thailand and Japan prevented nearly-finished cars from being shipped overseas.
Diversifying your network (also called multisourcing) starts with categorizing partners based on two criteria: current cost and financial impact if that partner can’t follow through in the event of unforeseen circumstances. Then, you can forge relationships with additional suppliers or a supplier that has capabilities in multiple locations.
3. Invest in demand forecasting
Demand forecasting is the process of using data—not gut feelings—to gauge the demand for materials ahead of time, so you don’t come up short when it matters most. Accurate demand forecasting improves lead times, cuts costs, and improves customer satisfaction.
Think of it like your weather app: if there’s a chance of rain, you know to pack an umbrella and dry clothes. Is it more stuff to carry? Sure, but you’d be upset if you ignored the forecast and got soaked.
There are numerous methods to predict demand, like surveying customers, monitoring social media, reviewing historical data and trends, or soliciting advice from a consultant.
4. Standardize your processes
The more consistent you keep your supply chain operations, the more dependable it will be. This is especially true for organizations whose suppliers and manufacturers are scattered across the world.
Templates for platforms, products, and plants enable seamless production and adherence to compliance regulations. For example, companies in the automotive industry use common vehicle platforms to harmonize their supply chain strategy.
Examples of Supply Chain Strategy in Action
Let’s look at two quick examples of companies pivoting their supply chain strategy to adapt to market changes.
1. Walgreens leans into big data
In 2016, Walgreens, one of the biggest pharmacy chains in the world, started investing in forward-looking supply chain technology that aggregates consumer data and crunches the numbers to predict future purchasing behavior.
These metrics help Walgreens adjust its supply chain to reduce excess inventory and cut costs for warehousing and transportation. They also ensure they have enough stock to meet expected customer demands.
2. Bob’s Discount Furniture: keeping tabs on tariffs
Trade wars are notorious for rattling global supply chains. But the stakeholders at Bob’s Discount Furniture couldn’t afford to get blindsided.
In 2018, the US-based furniture retailer kept a pulse on the news about the potential for higher tariffs on goods sourced from China—which would directly impact their business. In response, they shifted 25-30% of their furniture sourcing out of China within 3-4 months at the beginning of 2019.
3 benefits of a resilient supply chain strategy
Supply chain resilience isn’t just a theory. It’s a practical strategy that gives organizations a competitive advantage—and it’s backed by evidence.
1. Improved productivity
A 2020 McKinsey survey found that supply chain leaders improved their productivity due to resilient supply chain systems. Moreover, 93% of respondents planned to increase their supply chain resilience through strategies like multisourcing and rising inventory levels.
2. Less risk
There’s no such thing as a “risk-free” supply chain. The complexity of supply chains makes them inherently vulnerable to factors outside the organization’s control. However, incorporating the strategies above into your planning process can improve sustainability and minimize the impact of interference if and when it happens.
3. It’s a path to innovation
When risk is mitigated along the supply chain, leaders can set their sights on other aspects of the business, like new technology and automation. A 2020 global business analysis by Brian and Company found that companies that prioritized supply chain resilience expanded their output capacity by up to 25% and had up to 60% shorter product development cycles.
Optimizing your supply chain is an investment, not a cost
It’s almost impossible to predict what the next big threat will be, and that’s precisely why supply chain professionals are starting to turn away from the lean supply chain design that prevailed for decades.
You can’t put a price on resilience—it can make the difference between merely surviving a challenge and emerging more robust than before.