Tag Archives: Supply Chain Management

How’s your supply chain running these days? If you’re like most manufacturers, you’re still experiencing challenges. Big challenges. The pandemic threw the worldwide supply chain into chaos and it hasn’t yet recovered, but the truth is, there have always been supply chain issues bedeviling the industry. The pandemic just exacerbated what already had the potential to go wrong and uncovered new problems lurking just below the surface.

Just-in-time strategies, which were (and continue to be) popular methods of having just the right amount of inventory on hand at any given time, left manufacturers vulnerable to supply chain disruptions. The increasing complexity of global supply chains didn’t help the situation, nor did the pervasive lack of visibility into supply chains themselves.

What are manufacturers facing this year in terms of their supply chain? Let’s take a look at these issues, and examine some ways USC can help.

Manufacturers supply chain challenges for 2024

Materials shortages. Global instability, the lingering effects of the pandemic and other factors are leading to shortages of raw materials and components. Production delays, increased costs and unhappy customers are the result. And speaking of costs…

Rising freight costs. As fuel prices ride the same roller coaster we’re all seeing at the gas pump, and labor shortages and ongoing congestion at ports collide, it means costs to get those components and materials are going up, eating into your profits. And speaking of labor shortages…

Labor shortages. This problem is ongoing, and we have to say, it’s one thing that wasn’t caused by the pandemic. Manufacturing workers are aging and retiring, and there isn’t a large pipeline of younger people with the skills to replace them. It means reduced output and productivity, dwindling motivation and drive, and the loss of institutional knowledge.

DRIP. It stands for data rich, information poor. When you’re talking about the supply chain, it means you need to use data to its fullest. Outdated inventory systems won’t cut it.

Tactics that can help

Diversifying supply chains. Having too many eggs in one basket has proven costly when that basket falls apart. Reliance on any one supplier, especially if that supplier is overseas, is becoming yesterday’s strategy that is just not working in today’s market.

Reshoring. Supply chain disruption, ongoing global instability, higher costs (including higher labor costs in China), increased lead times and more hassles are leading companies to reconsider foreign sources. Many are already doing it. Yahoo Finance reported in June 2023 that 80% of manufacturers are now considering or acting on reshoring some or all of their production. A couple of quick examples: General Motors invested $7 billion in production facilities in Michigan to not just manufacture electric vehicles but the batteries that power them. Intel invested $20 billion in a new semiconductor manufacturing plant in Ohio, and is investing $30 billion for a similar facility in Arizona. Some manufacturers are “nearshoring,” bringing production closer to home, from China to Mexico, say. Not only will this reduce lead times, improve quality control and leave companies less vulnerable to global unrest, it will also create jobs here at home.

SIOP. We laud this tactic often because it really does improve efficiency, but in the age of supply chain disruption, it’s crucial. Sales, Inventory and Operations Planning (SIOP) is a collaborative process that aligns all departments. It involves using inventory as a strategic tool, demand management and supply planning, giving you the ability to capture, analyze, integrate and interpret data to give you a strategic advantage.

Learn more about SIOP in our free eBook, Sales, Inventory and Operations Planning: It’s About Time.

Solid training. The labor shortage isn’t going away, and we’re finding that many manufacturers are investing in training, ensuring that everyone is doing the job the same way, with rock-solid operating procedures. It’s a powerful way to keep institutional knowledge within your facilities, instead of losing it when people retire.

At USC Consulting Group, we have over 55 years of experience helping manufacturers ramp up their efficiency, production and operations. It’s especially crucial to be firing on all cylinders during challenging times… and we’re in them, right now. Give us a call and let’s talk about how we can help.

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Effective inventory management is often a challenging task for businesses to undertake. While some factors may be similar across organizations, predicting inventory demand can vary significantly depending on the industry or business model. One of the most common problems affecting various industries is a lack of inventory visibility.

Inventory visibility issues have become increasingly prevalent with the rise of online shopping. The additional steps and expediency demands of this now preferred process can make tracking an item even more complicated. This often results in invisible inventory, where materials or products are unaccounted for in the system.

To address these issues, many companies are turning to supply chain visibility (SCV) technologies to remain competitive. These advanced systems provide real-time tracking, monitoring, and notification of each item in the supply chain. By utilizing responsive supply chains, a company can increase transparency within its inbound/outbound processes and other daily activities.

Another innovative solution is cloud-based POS systems and e-commerce management software. This technology integrates every aspect of a business for greater efficiency and offers a range of benefits. Companies can use it to track sales and customers, exercise better point of sale control, automate inventory replenishment, and generate reports with detailed analysis of gross margin ROI.

By utilizing modern technology to improve inventory visibility, businesses can stay ahead of the competition and provide better customer satisfaction. To discover strategies for staying ahead in inventory management, we encourage you to explore the resource provided below. It offers valuable insights to help you tackle this crucial aspect of your business operations.

If you need assistance with your inventory management, contact USC Consulting Group today.

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The B2B supply chain is changing in this tech-forward world. Like so many other things, if you’re not getting on board with smart business tech, you could be missing out on important successes. That starts with your supply and integrating tech to reduce human error and track things more clearly.

As a B2B business owner, you already know that transactions tend to happen within the supply chain. Whether you’re a wholesaler or retailer, if you’re not using tech to keep track of your supply and your sales, your business might not be able to keep up with those who are integrating different types of tech – including cloud-based technology.

Let’s take a close look at how smart business tech is optimizing the B2B supply chain, and what steps you can take to implement more sophisticated technology into your management strategy.

Why Smart Tech Matters

Tech innovations aren’t just important for manufacturing purposes. They are extremely beneficial for every step in the B2B supply chain. If you’re a supplier, integrating smart tech into your supply chain strategy can help with things like:

• Compliance
• Cash flow
• Efficiency
• Accuracy
• Speed

You’re also reducing the risk of human error throughout the process, especially when it comes to processing and fulfillment. Integrating smart technology as a part of your risk management plan makes it easier to reduce risk and put plans in place for fast recovery if disaster does strike within your supply chain.

Additionally, when you use things like automation and AI, you’ll actually end up freeing up many of your employees so they can focus on other tasks while improving efficiency. Your business can grow, your employees can move up the ladder, and you can move more product safely and quickly.

What You Can Do Today

Although technology is quickly advancing, there is plenty of technology you can start implementing into your B2B supply chain strategy immediately. For example, Enterprise Resource Planning (ERP) software will help you overcome existing challenges you might face within supply chain management, including:

• Customer acquisition
• Retention
• A global shift toward e-commerce
• Time constraints

With this kind of software, you’ll enjoy seamless data transfer from system to system. This offers another opportunity to reduce human error while optimizing your efforts because you won’t have to rely on manual data entry. Instead, you’ll have a consistently-updated clear picture of your efforts.

You’ll also be able to take advantage of automated workflows and accurate shipment tracking while offering greater confidence in fulfilling orders on time.

Integrating ERP software into your existing system should be just the beginning when it comes to what you’ll be able to do in the future with smart business tech. As you continue to grow, take advantage of existing technology that is becoming more widely available to small businesses and enterprises alike.

Preparing for the Future

As our globe becomes inundated with fossil fuels, every business needs to do its part in reducing its footprint to succeed in the future. Luckily, our world has combined the power of technology and sustainability, and nowhere is that more evident than in solar power technology. In the last decade alone, the limits of solar technology have broken down significantly. Today, solar power has been used for a variety of purposes, including transportation, military defense, and even space exploration.

When it comes to harnessing solar power for your B2B supply chain, it can be utilized almost anywhere you’re currently relying on traditional forms of energy. You can take advantage of solar energy-powered transportation by integrating it into your fleet. Not only will it help to reduce your overall reliance on fossil fuels and reduce your budget for fuel, but it can shed a positive light on your business practices and help with client acquisition

In addition to solar technology, you should also be looking into 5G for the future of your supply chain. Integrating 5G into your existing supply chain tech will help to reduce disruptions and improve optimization efforts. Things like smart sensors can be placed on your fleet trucks to track product location or determine the cause(s) of delays in real time. Shipments can be tracked electronically to prevent cargo from getting lost. Again, the risk of human error will be greatly reduced this way. 5G makes it much easier to implement AI and automation into your strategy without having to worry about network lags or lapses in connection.

Many people look at the supply chain industry and automatically assume it’s outdated. Others think if it’s not “broken,” it shouldn’t be fixed. But, smart technology is already optimizing the B2B supply chain, and the businesses that don’t jump on board will experience greater losses, delays, and burnt-out employees for years to come. Consider some of the tech solutions you can implement now and in the future, and you’re likely to see greater success and more streamlined production.

*This article is written by Ainsley Lawrence. View more of Ainsley’s articles here.

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Supply chain technology has come a long way in the past few years. Improvements in AI technology and deep learning programs can help supply chain managers accurately predict shortages, adapt to current conditions, and operate more efficiently.

Supply chain technology can also be used to improve the customer journey. Effective supply chain management leverages the Internet of Things (IoT) to give consumers greater control over their orders. Emerging technology can also be used to reduce human error, increase operational efficiency, and improve security.

These breakthroughs in technology improve the customer experience and ensure that consumers get the products they want when they need them.

CX and SCM

At first glance, consumer experience (CX) and supply chain management (SCM) seem unrelated. However, as senior sales executive Sven Esser points out “the relationship between CX and SCM is symbiotic.”

Esser goes on to explain that effectively mapping the customer journey is an important facet of effective CX and SCM. Predicting consumer behavior ensures that supply chains are operating as efficiently as possible and that consumers have accurate information about shipping and order fulfillment before they check out.

Esser advocates for a model of SCM that gets to know consumers and uses AI analytics to accurately map and predict the typical consumer journey. This will help businesses connect with consumers’ personal needs and help supply chain managers shift to a more “customer-focused effort.”

Businesses can use AI analytics to map the consumer journey and improve their SCM through Google Analytics (GA4). GA4 is typically used by marketers who want to improve the materials. However, GA4 can also be used to track users from the referral page to the conversion or exit page.

Supply chain managers can work with marketing to get a better picture of the consumer journey and typical behavior. GA4 can be particularly useful for businesses that use the IoT to place orders or improve CX.

The IoT

The Internet of Things (IoT) is revolutionizing industries around the world. Consumers and businesses can use the IoT to link devices and create “smart” networks between products and machines.

The IoT can also improve the efficiency of supply chains by giving businesses an up-to-date assessment of inventory and potential problems. For example, a business that runs an IoT-integrated warehouse will be aware of issues like faulty equipment and disrupted supply lines earlier than competitors who do not leverage the IoT.

IoT-integrated supply chains can improve the consumer journey directly, too. IoT technology makes it easier for customers to place and edit orders. For example, folks who utilize smart home devices like Google Nest or Amazon’s Alexa can place and edit orders with a simple voice command.

Human Error

Emerging technology like AI software and the IoT is designed to improve operational efficiency and streamline the consumer journey. However, human error still threatens to derail business operations and supply chains.

Supply chain managers can reduce the risk of human error in the workplace by automating relevant processes. This is particularly important in warehouse management, where human error may result in injury due to repetitive motions or dangerous working conditions. Automated machines in smart factories and warehouses can take humans out of the firing line and ensure that customers have their orders fulfilled with minimal delays.

Supply chain technology can also improve post-sale communication with consumers. Consumers who have ordered expensive goods want regular updates on the status of their products. Businesses can send out automated emails when the customer’s product has passed production phases and is ready for shipping. Automated communication improves the customer journey by alleviating worries about order fulfillment without derailing operational efficiency.

Operational Efficiency

Operational efficiency is at the heart of a successful customer journey. Customers can tell when all departments are working in unison and will benefit from quicker order fulfillment due to higher efficiency in the workplace.

Maximizing operational efficiency is particularly important for businesses that use Just-in-time (JIT) inventory management. JIT inventory management relies on accurate consumer forecasts and robust supply chain management to ensure that businesses get the inventory they need just when they need it. This can result in major savings, which can be passed onto the consumer or used to otherwise improve the customer journey.

However, for inventory management methods like JIT to work, businesses need to hyperautomate their operations. Hyperautomation allows businesses to “rapidly identify, vet, and automate as many business and IT processes as possible.” Hyperautomation relies on deep learning programs that can successfully capture and utilize massive data sets. This will improve the customer journey, too, as the same data sets can be used to present personalized adverts and products to consumers.

Conclusion

Emerging technology like the IoT can have a direct impact on the customer journey. Consumers today can place, edit, and receive orders using a network of machines and devices that are connected by AI algorithms. Recent upgrades to supply chain technology can also improve operational efficiency and reduce the risk of human error in factories and warehouses. This ensures that consumers receive their orders with minimal delay and at a lower cost.

*This article is written by Ainsley Lawrence. View more of Ainsley’s articles here.

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In many industries, globalization has resulted in the consolidation of suppliers and increasingly interdependent Supply Chains. Globalization has increased efficiencies and economies of scale, but it has led to decreased diversity of sourcing and supply options.

Increasing geopolitical tensions, pandemic related lockdowns, and ideological polarizations have increased supply chain disruptions for many products and materials.

Supply Chain Risk Management System

An active Supply Chain Risk Management System cannot ensure continuity of supply, however, it can provide a playbook with options when sources of supply are threatened.

This Playbook details the various concepts that will secure your operations, including:

Installing a well-functioning Supply Chain Risk Management Operating System is a journey, not an event.

Enhancing responsiveness to risk provides competitive advantages, especially in industries where competition for key vendors, access to resources, and logistics constraints are prevalent.

USC Consulting Group’s Supply Chain experts have over 50 years of industry experience with the latest risk management practices and can help you with your unique challenges. Contact us to remove the risks and start driving operational improvements in your business.

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Supply chain analytics refers to the collection of data and information that provide insights into logistics performance, from inventory management to fulfilling and shipping orders.

How Data Analytics is Changing the Supply Chain Landscape

The ever-increasing reliance on big data is altering the landscape of supply chains as we know them. Historically, the majority of supply chain management was dependent on intuition and experience. However, with the introduction of powerful data analytics technologies, supply chains are now guided by data-driven decision making.

The ever-increasing availability of data is driving this transition. Previously, data was dispersed across numerous silos inside a business, making it difficult to provide a comprehensive perspective of the supply chain. Organizations, on the other hand, may collect and store data from all areas of the supply chain in one central location owing to data warehouses and data lakes. This enables supply chain managers to see the entire picture and make data-driven decisions to increase efficiencies and performance.

The rising availability of strong data analytics tools is another factor pushing the change to data-driven decision making. To examine data in the past, supply chain managers had to rely on manual procedures or limited software tools. However, a wide range of powerful data analytics technologies is now available to assist managers in making sense of massive data sets and uncovering hidden patterns and trends. The transition to data-driven decision making is reshaping the supply chain landscape and has far reaching implications for how businesses function.

Organizations may improve the efficiency and performance of their supply chains by leveraging the power of data, providing them with a competitive advantage in the marketplace.

The Advantages of Data Analytics in Supply Chain Management

Data analytics can aid in the smooth and effective operation of supply chains. Supply chains can uncover patterns and trends in past shipments by examining data from previous shipments. This can help them minimize disruptions and stock-outs while also improving inventory management. Furthermore, data analytics can assist supply chains in optimizing their routes and schedules, as well as tracking their success over time.

Here are some of the primary advantages of employing data analytics in supply chain management:

• Reduced Inventory Costs
• Optimized Production Plans
• More Efficient Cargo Shipments
• Reduced Risks
• Cross-Functional Cooperation

Check out the following infographic by 2Flow which takes a deep dive into ‘Analytics In The Supply Chain’.

Supply chain analytics are guiding managers into the future with data-driven decision making. If you need assistance properly analyzing your data and setting up your supply chain management for success, contact USC Consulting Group today.

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The automotive industry outlook shows it travelling down the road toward another challenging year. The global supply chain is still reeling from COVID-era issues resulting in slow manufacturing times. Reduced consumer demand for traditional vehicles is impacting the industry, and the gasoline crisis amid the Russia-Ukraine tensions is keeping people off the roads. Despite these challenges, there is great reason for positivity. Brighter skies are on the horizon.

One especially bright spot: Electric vehicles. EVs have taken the market by storm, with many manufacturers worldwide making pledges for increased production and utilization of this emerging technology. Along with that comes increased need for things like batteries and charging stations to support widespread EV use. It’s exciting to see the increased need for the infrastructure and tools required to go electric!

In this article — with information from The Economist Intelligence Unit’s (EIU) comprehensive Automotive Industry Outlook 2023 — we will highlight key trends to be aware of in the industry for the coming year.

Gas Uncertainty

As long as the tensions between Russia and Ukraine persist, gas prices and availability will remain a question mark — but it’s a trend that started long before those tensions erupted. It began with the COVID pandemic.

Beginning in March of 2020, demand for gas plummeted when the majority of the U.S. was put on forced isolation. People just weren’t commuting. The highways were like ghost towns. Midway through the pandemic, folks started wondering when was the last time they filled up their gas tanks. They might not have been able to remember, but the industry certainly did. It caused many of the oil refineries in the United States to stall or close their doors for good.

While refinery numbers are slowly creeping back up, challenges still exist. According to the Refinery Capacity Report from the U.S. Energy Information Administration (EIA), this past June saw a refining shortage of roughly one million barrels of oil a day compared to pre-pandemic numbers. Add that to the ongoing tensions in Eastern Europe, and the market has many questions to answer in regards to supply and refinement capabilities.

Supply chain shortages

While the global supply chain is rebounding from the unprecedented COVID-era delays, there is still work to be done and shortages of supply.

One of the most prominent concerns for the automotive industry is the status and availability of semiconductors. EIU anticipates that additional capacity for this essential piece of equipment won’t come until 2024 — and the shortages of essential minerals such as steel, aluminum, nickel and lithium won’t just impact the semiconductor market, but the production of EV batteries as well.

To combat this, many countries are taking action to increase local production and mineral extraction. The United States, for example, recently passed the CHIPS and Science Act of 2022. According to the White House briefing, the act will drastically increase domestic semiconductor research and production, and “strengthen American manufacturing, supply chains, and national security, and invest in research and development, science and technology (…) including nanotechnology, clean energy, quantum computing, and artificial intelligence.”

It remains to be seen if this can supplement the semiconductor shortage for 2023, but it is certainly a step in the right direction for future availability.

Stalled sales

After a rise in both new and used vehicle prices in 2022, sales for traditional automobiles are set to decline in 2023. The reasons include a perfect storm of reduced commuting time for people who continue to work from home, continued high gas prices and the aforementioned supply chain issues and semiconductor shortages, which caused a massive increase in cost for both new and used vehicles. The result? People are putting off buying new vehicles as their cars sit in their garages. One of the biggest culprits is simply the rising prices of new cars. Consumers paid $3,462 more on average for a new vehicle in 2022 than the previous year.

Slowly but surely, as the supply chain issues are repairing and more supply enters the market, sales and prices are set to decrease in the upcoming year. The EIU predicts that new car sales will decrease by 2.4% in North America… but estimated global vehicle sales of $79 million will continue to fall short of the pre-pandemic $88 million in sales.

“The total EV investment among automotive suppliers and manufacturers is set to reach $526 billion between 2022 and 2026.“

The EV wave

The shining star of the automotive industry in 2023 and beyond is the continued production and implementation of electric vehicles and charging stations.

While electric vehicles only accounted for 8% of global sales in 2021, production and market share is set to explode to an estimated 33% of global sales by 2028, and as high as 54% in 2035, according to Reuters. Not only that, but the total EV investment among automotive suppliers and manufacturers is set to reach $526 billion between 2022 and 2026, nearly double the investment from the beginning of the decade.

The EIU confirms that optimism, predicting that the sales of electric vehicles will grow by roughly 25% in 2023, to almost 11 million units. The ongoing tax breaks and subsidies provided by countries around the world are seemingly propelling this growth, with more incentive now than ever to join the EV automotive revolution.

We can help to navigate uncertainty

While the automotive industry outlook is set for a challenging year in 2023, there is still light at the end of the tunnel for manufacturers to get back on track and capitalize on new trends.

At USC Consulting Group, we are always ready to help your organization stay on top of the automotive industry. Give us a call today to ensure successful operations in the upcoming year and the foreseeable future.

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Since Covid people who never heard the term “supply chain” have become painfully aware of what it means and how deeply it impacts their lives. It doesn’t take a viral pandemic to create supply chain disruptions. A factory fire, a natural disaster, or resource scarcity — everyday occurrences — can all lead to items disappearing from shelves.

The recent formula shortage was largely due to a single factory being temporarily shut down.

Product shortages can be a significant hardship for families all around the world. In this article, we talk about how data mining can add stability and predictability to supply chain management.

First, What is Data Mining?

Data mining is the practice of looking at large quantities of information already stored in a database to retrieve new insights from it. Basically, it’s the process businesses use to create actionable knowledge. In the context of supply chain management, the data could pertain to anything from consumer habits, transportation routes, product development, or resource excavation.

Every single action that takes a raw resource out of a mine or jungle and turns it into a product on your shelf creates information. More information than any human (or, for that matter, any room of humans) could ever examine in two lifetimes.

With data mining, data processing, and data analysis, that information can be tamed and channeled toward productive means.

Supply Chain Threats

What variables currently threaten supply chain management? Because there are so many steps taken to turn raw material into a physical product, many variables can interrupt the process. Perhaps there is a storm that halts excavation. A viral outbreak that pauses work at a factory.

Disruptions in the transportation sector. Maybe the demand for a product is so much higher than anticipated that it becomes impossible to manufacture it at an appropriate pace.

All of these scenarios can lead to supply chain disruptions. Through data mining, however, many of them can be mitigated or avoided outright.

Understanding Supply

Let’s say (with unfortunate accuracy) that there is a recession projected to sweep through the country in the not-so-distant future. Naturally, financial downturns can have a significant impact on the way people shop.

But how can stores and supply chain managers use this information to make sure that there is plenty of the things people need and a relatively modest amount of things that will go largely ignored?

Data!

Using historic shopping data, supply chain managers can get a vivid forecast of how people are likely to behave during the next recession. This might mean deemphasizing the production and supply creation of luxury items and focusing more on putting staples on the shelves.

Fleet Management

The transportation industry is an enormously important component of supply chain management. Using IoT (internet of things) and data, fleet managers now enjoy unprecedented control over their routes. Maps, even GPS-driven maps, tend to be relatively limited in how granular they get. Route recommendations mostly factor in distances. Even programs that account for speed limits, etc. do so for the benefit of personal vehicles.

Trucking is a different animal. Does this route include a short overpass that the truck will need to detour to get around? Maybe the road winds, requiring a large vehicle to slow down to a crawl.

With historical route data, mined through telematics technology (sensors, mostly) fleet managers now get automated reports that recommend the best routes for their trucks. These recommendations not only factor in arrival times, but can also be calibrated to make recommendations most likely to preserve the condition of the vehicle.

Transportation companies run more efficiently. Products arrive at their destinations on time. It’s a win for everyone.

Adjusting the Chain

In a post-Covid world, one needn’t stretch their imagination to imagine a scenario where something could go wrong within a supply chain. Delays and shortages can happen after only a single break in the chain.

With data, supply chain managers can make reasonable forecasts about potential disruptions, and plan accordingly. Already, the supply chain management industry has moved toward keeping a healthy supply of alternative production lines — often closer to home — so that they can pivot immediately into new solutions when problems arise.

With robust access to data, supply chain managers can receive quicker insights as to when they should reach for these solutions.

The result? Fewer disruptions, and significantly more consumer stability.  No more months and months of waiting for a new refrigerator or oven.

*This article is written by Andrew Deen. Andrew has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He implements lean methodology and is currently writing a book about scaling up business. You can follow him on Twitter @AndrewDeen14.

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The supply chain refers to all activities involved in converting raw materials to finished products and getting the finished products to the final consumer, forming a vital cog in the business wheel. A successful business depends on the success or efficiency of its supply chain. Thus, the need to constantly monitor the various supply chain stages, from raw material sourcing to delivery to the final consumer, ensuring smooth operations for maximum returns.

To achieve this, you need to constantly measure the performance of your supply chain using various Key Performance Indicators (KPIs). For instance, a shipping line from China to UAE is most likely to measure the speed of delivery as a KPI while a retail store measures the number of cash sales or customer service as a crucial aspect of the business that success relies on.

Thus, supply chain KPIs are a set of measurable metrics that tell you about the efficiency of your supply chain over a while and help you identify the weak areas of the supply chain where improvement is needed for better performance. They also help monitor the overall business efficiency in cost, value service, and waste generated and measure the progress in achieving its goals. Thus, the importance of KPI in supply chain.

There are several KPIs that a company can choose to measure depending on the crucial aspects of the business that it focuses on. This article will expose you to some top KPIs common among businesses and industries that can be used to measure supply chain efficiency.

Top supply chain KPIs to focus on

Supply chain KPIs are measures of supply chain performance, helping improve business productivity and customer satisfaction. The following are top supply chain performance metrics that aid supply chain managers measure and work towards achieving these objectives.

Perfect order

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This is crucial to measuring supply chain efficiency and comprises various other smaller metrics. It also gives you an insight into the efficiency of your order fulfillment and helps track storage and delivery options, as well as cost and customer satisfaction. Perfect order comprises

1. On-time delivery: A measure of the percentage of delivery that got to the customer at the desired time
2. In-full delivery: A percentage of the correct delivery made to the right customer
3. Damage-free delivery: This calculates the ratio of goods delivered to the customer in good condition, without any damage.
4. Accurate documentation: This gives an insight into the percentage of deliveries made with correct documentation such as invoices, packing lists, labels, etc.

A low value for these KPIs depicts low customer satisfaction, which can lead to loss of sales and poor business yields. In addition, it also gives an insight into the cost incurred by inefficient order fulfillment. The formula for calculating perfect order is

[(total number of orders – number of orders with errors)/ total number of orders] x 100

• The number of orders with errors can be any of the four smaller components of perfect order KPI.

Cash to cash time cycle

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This measures the time it takes to receive cash for an inventory purchased. It is the time between when you pay for inventory and when you receive money from the sales of that inventory or the time taken to convert resources to cash flows. A low figure for this KPI means that your inventory doesn’t spend much time in your warehouse before selling them and is great for the business.

On the other hand, a high value means that goods are spending too much time in the warehouse and can be improved by better forecasting and stocking faster-selling goods. Although this metric seems more like a financial one, it is a vital tool for determining your supply chain efficiency. The formula for calculating cash to cash cycle is

Inventory outstanding days + Sales outstanding days – Payables outstanding days

Freight Bill Accuracy

This is essential to measure the accuracy of shipments from the supplier and to the end customers. Shipping is a critical part of business logistics and must be carried out with utmost precision as a slight error can affect business profitability and lead to poor customer experience. Therefore, the need to maintain billing accuracy in the supply chain.

Tracking this KPI will help you identify negative trends in billing accuracy, helping you improve this metric and increase business profitability and growth. The formula for this KPI is

(Error-free bills – total number of bills) x 100

Inventory turnover

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This KPI gives an idea of the frequency of selling your entire inventory over a given period. A high value for this KPI indicates efficiency in production planning, fulfillment abilities, sales and marketing strategy, and process strategy. Calculating this KPI will also give you an idea of where you stand among your competitors when you compare your value with theirs.

Inventory turnover measures the efficiency with which you turn your working capital into business profits, and you can improve this KPI by working on your sales and marketing strategy and other areas of your business that affects your business turnover such as fulfillment operations and production processes. The formula for this KPI is

Cost of goods sold/ [(Opening stock – Closing stock)/2]

Inventory velocity

This is a measure of the speed at which inventory is sold. It shows how much inventory is expected to be sold during a given period and how much inventory is left, facilitating better inventory planning and management. A good value for this KPI signifies optimized warehouse operations and inventory planning and helps reduce the risk of overstocking and outdated inventory while also increasing customer satisfaction.

Inventory can be classified as fast-moving (75% – 80%), slow-moving (< 60%), or continuously-moving (60% – 70%) items according to their inventory velocity determined by monthly sales, the number of items leftover in the warehouse, or margin percentage. This will help you identify goods that sell fast and invest more in them.

The formula for this KPI is (Opening stock/ Next period’s Sales Forecast)

Conclusion

No matter the nature of the business, all businesses in the manufacturing industry have a common feature of receiving raw materials and processing them into finished goods delivered to the customer. As such, the need for an efficient supply chain system to manage the supply chain operations optimally. Identifying various KPIs critical to business performance and measuring them will help achieve this efficiency.

Organizations can also employ executive dashboards that use various supply chain metrics to provide real-time information that can help in decision-making. Whether calculated manually or with the use of executive dashboards, keeping track of these KPIs and many others is critical to ensuring supply chain efficiency and ultimately business success and profitability.

*This article is written by Danielle Gregory. Danielle is a writer and marketing expert who is currently working for QAFILA. Danielle’s writing relates to a range of subjects such as logistics and IoT. Besides writing, she enjoys traveling, cooking, and riding.

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Supply chain management is a crucial part of every business, which has a wide range of effects, from the streamlined transfer of goods and services to improved customer satisfaction. In this digital age, it has become easier to understand the complexities or risks that affect the supply chain. In general, the supply chain exists in both the services and manufacturing organizations. However, the risk of complexity varies in different organizations.

Managing it effectively is not a simple task. It consists of several challenges and demands to constantly develop a new skill and update the existing one. By implementing effective tactics, you can easily enhance high supply chain performance.

Supply-Chain Essentials Every Manager Should Know

Here are a few things managers should know about managing the end-to-end supply chain from raw material to finished products.

1. Business Communication

If you want to be a leader in supply chain management, you have to communicate well. Depending on whether your company is dealing internationally or locally, being an efficient communicator will surely help you to gain some position in the marketplace. As a supply chain leader, you should be aware of the terms like ROIC, EBITDA, and economic profit. These technical terms must be part of your everyday vocabulary as you would be delivering schedules with suppliers.

2. The Know-How To Negotiate

Negotiation is pivotal in supply chain management. If you want to be successful in this industry, you have to be a good negotiator. Whether you are a lead or participant in negotiation, your skill will influence the relationship of the opposite party.

If you have negotiation skills, you will enter into the discussions looking for an outcome that will satisfy the results. Ask as many questions as you can. It will clear the doubt. An excellent negotiator pays close attention to the opposite parties’ behavior.

3. Customer-First Thinking Is The Key

Supply chain organizations should think about the customer first. This means thinking for the customer when making a decision about the supply chain. In order to gain a good relationship with your customers, you need to spend some time with them and understand their needs and considerations. By focusing on these parameters, you can shape a supply chain that satisfies the customer.

Building a customer-centric supply chain is not easy. All the departments, from suppliers to manufacturers, are involved in the supply chain. You must find new ways to meet customers’ needs and exceed their expectations. In 2021, Assignment Assistance UK formed a customer-centric marketing campaign, and the results were amazing, as the sale ratio exceeded their expectations.

4. Understanding Cost-To-Serve

Cost-to-serve is basically a cross-supply chain method used to focus on process-based costs. It helps in calculating the cost-effectiveness of product and market routes along with the customer profitability. Furthermore, it provides you with a fact-based focus to make decisions on operational changes and service mix for each particular customer.

If you can understand the cost-to-serve, you will be able to make decisions to improve the customer’s outcome. Some supply chain leaders have gifted skills, while others need to train themselves and require practice.

If you apply the cost-to-serve concept to your company’s supply chain activity, then you will be able to build a profitable relationship with customers and the production team. That’s why ease with the cost-to-serve is a good skill that helps you to stand out as a competent supply chain professional.

5. Data Is Everything

Data is crucial in business to formulate strategies, streamline operations, introduce new services, and ensure customer satisfaction. But data is nothing unless it is analyzed. I have seen that most of the decisions in supply chain activities are instinct-based, neglecting data analysis.

Always keep a keen eye on cost and never assume something is great because everyone loves new deals. Look at the facts and data and do not rely on emotions and instinct when making decisions. While concluding a literature review, Bob Tucker describes supply chain analytics as the ability to use data in order to improve all activities across the supply chain.

Since data analysis has been utilized for years, the introduction of new technologies like machine learning or artificial intelligence has led to contribution in today’s supply chain forecasting.

Benefits Of Following Supply Chain Essentials

The supply chain plays a vital role in boosting several business processes, including your relationships. Supply chain management isn’t a simple experiment, but effective supply chain management offers several benefits that improve the bottom line. Let’s look at some of the benefits of effective supply chain management.

a) Better Collaboration

In order to resolve any problem, the supply chain team should be able to share information with stakeholders and communicate with the right people at the right time. Consistent communication improves the relationship, which results in better collaboration and boosted business.

b) Improved Risk Mitigation

Having knowledge of risk help companies in achieving their goals. For instance, 87% of companies believe they could reduce inventory by 22% if they have a better risk management system. This all can be achieved by following the supply chain essentials.

c) Better Quality Control

The quality control process improves once a manager starts following supply chain essentials. Since, data analysis is used for decision making, it helps in producing quality products.

Quality control in the supply chain helps to maintain the company’s reputation. In this modern age, the main goal is to gain a unique place in customers’ minds. For this, the quality control subcontractor gives suggestions to companies to increase their benefits.

Conclusion

The supply chain manager focuses on a better relationship with all the members of the supply chain, including the customers. Today, the supply chain industry is growing rapidly. Hence, making a data driven-approach to supply chain management is a must.

Data is not only driven by effective supply chain management but there are also factors such as good vendor and supplier relationships, effective cost control, securing the right logistics partners and adoption of effective supply chain technologies. An efficient manager takes into consideration all these factors, which result in an improved supply chain process.

*This article is written by Claudia Jeffrey. Claudia is currently working as an Auditor at crowdwriter. She has previously looked after operations and customer service departments in the same firm. Claudia is keen to manage an effective supply chain process and believes in company growth with the customers. She loves to travel and explore the world.

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