For any organization, maintaining an efficient supply chain means getting raw materials and products at the right time, in the right quantities, and at minimum costs. Functions such as inventory management, production planning, operations, sales, and distribution depend on a supply chain that is both effective and dependable.
According to a recent GEODIS report, 57% of companies believe maintaining an efficient supply chain gives them a competitive edge, yet only 6% have visibility into what’s actually happening in the background.
To be prepared, improving supply chain efficiency should be a top priority for every company. Even for those companies that manage efficient supply chains, improvements are always possible. Below are three tips to help ensure your supply chain is operating as efficiently as possible.
Tip 1: Select a Top-Quality OEM Manufacturing Supplier
Building a supply chain that works effectively for your organization begins with selecting an original equipment manufacturer (OEM) supplier that can produce consistent on-time delivery of the quality and quantity of parts you need. A dependable, trustworthy, and reliable supplier is the basis for an efficient flow of materials.
When researching suppliers, consider the following factors when making your selection:
- What programs are in place to ensure quality output?
- Do they stay abreast of the latest technologies?
- Do they have good relationships with their suppliers?
- Are facility tours and pre-shipping quality checks permitted?
- Do they have long-term, well-established customers?
- Do they have a track record of success?
- Are they willing to provide customer references and referrals?
Tip 2: Understand the Supply Chain Flows
Three process flow components of a supply chain must be considered when building supply chain efficiency. These include the flow of materials, the flow of information, and the flow of money.
Flow Of Materials
Material flows along a supply chain can be complex. Often the process involves material first flowing from the customer to the supplier. This happens when customer-supplied parts, tooling, or packaging are used by the supplier to make and ship the parts. Material also moves internally within the supplier’s facilities until ready to ship. Finally, the product flows to the customer through various logistics agencies and functions, such as:
- Material handling operations
- Commercial carriers
- Transportation facilities
Understanding each step of this process and ensuring each step is carefully managed is key to ensuring supply chain efficiency.
Flow Of Information
Many OEM parts are uniquely designed parts manufactured on a contract basis. To achieve high-quality results, a supplier must have all required information in hand with enough lead time to manufacture the required parts. Data such as quality details, packaging requirements, counts, and associated paperwork must be communicated carefully and in a timely manner. Missing even a single manufacturing detail can slow down or stop the supplier’s production process.
To ensure supply-chain efficiency, communication channels should be established at the beginning of each customer-supplier relationship. This provides a way for questions and information to flow quickly and easily between partners. Schedules, engineering changes, status reports, quality reports, and shipping instructions must flow frictionlessly and smoothly between each component in the chain.
Multiple departments could be involved in the flow process, so effective communication must avoid sending conflicting instructions and data to the supplier. Smooth and effective communication methods should be established and followed.
Flow Of Money
Satisfying the terms of all agreements and contracts at every step in the supply chain flow is vital in keeping the materials and information flowing in both directions. Oversights in payments or misunderstanding of payment terms can cause unnecessary delays in the flow of both data and materials.
All three process flows occur simultaneously within any supply chain, and attention should be focused on ensuring each element of the flow work together. Maintaining supply chain efficiency means careful attention to each step of each flow stream within the entire supply chain process.
Tip 3: Optimize Supply Chain Flows and Plan For Disruptions
Even the best planning cannot foresee unusual supply chain disruption events such as the COVID-19 pandemic or the Suez Canal blockage. These unexpected disruptions occur suddenly, without warning, and create major headaches in supplying final products to consumers. Often, however, interruptions to flows are caused by less dramatic events such as equipment breakdowns, labor unrest, natural disasters, governmental interference, or other incidents. Any unplanned stoppage in the expected movement of materials, information, or money can bring the supply chain flows to a halt.
To address these unknown future disruptions, suppliers and their partners should analyze each step in the supply chain and identify alternatives to use, should a disruption occur. Alternative flow paths and stoppage workarounds should be identified, documented, and communicated to all team members. For example, short-notice, “hot-shot” shippers should be available if a primary carrier cannot move materials. These arrangements should be established in advance so quick action can be taken in the event of an emergency to minimize material flow interruptions.
VPIC Group produces OEM parts for the motorcycle, powersports, and automotive industries. To learn how we can help keep your supply chain flowing efficiently, visit our website or contact us for more information.