The 12 Days Of Christmas For The Supply Chain
The countdown to the holidays is well underway, and as we inch closer by the minute, supply chain operations are gearing up in the hopes of creating lots of happy customers and little, if any dissatisfied ones. The good news is that it’s not too late for 2015. Below is a list starting with some immediate tips to stay ahead of the holiday rush, leading into more long term strategies companies can employ to enhance supply chain performance leading into 2016. So let’s get started with the 12 Days of Christmas for the supply chain!
On the first day of Christmas, my supply chain asked of me…
1. Gauge transportation cargo capacity and availability
Align priorities with each given trading partner to not only avoid service gaps or delays, but also better anticipate with contingency plans. It helps to be aware of on-time delivery (OTD) rates and make note of margin differences between OTD and late delivery charges that could result in lower profits.
2. Monitor order projections or promotion activities that could shift customer or channel demands
Sometimes false expectations can lead us astray, but being prepared for the unknown — or forecasted potential — gives companies the upper hand to better manage inventory levels that impact order fulfillment, customer satisfaction and holiday profits. For example, they can take steps to reduce PO processing time for faster turns and nimble ordering or catch problem orders before they ship with automated accuracy checks.
3. Check supplier inventory levels, including raw materials and packaging items
Stay in communication with trading partners to prevent shortages upstream in the supply chain that may result in lost holiday profits and customers frustrated with your brand. In order to prevent errors, delays and loss through the end-to-end supply chain, allocate the appropriate and sufficient amount of supplies while leveraging tools such as scales and barcode scanning for order fulfillment and delivery. Also, review supplier compliance with shipping tolerances so that inventory doesn’t arrive too early or too late.
4. Locate missing inventory in warehouse problem piles
Misplacements increase ordering, inventory, fulfillment and transportation costs, which ultimately cuts profits and wastes time and costs on additional monitoring. They can also increase seasonal stock levels potentially causing additional write-offs.
5. Review stock availability to offset projected defects or high return-rated products
Unfortunately RMAs are inevitable and there’s nothing like a disappointed or frustrated customer during the holidays. Appropriate planning for replacing returned items helps to turn RMA more smoothly and quickly (i.e., happier customers) as well as important intelligence communicated back to product and financial stakeholders. A real-time view of stock levels, whether in the warehouse, at a trading partner, in-transit or downstream on retail shelves, helps inventory planners, production managers and procurement officers make more informed decisions.
6. Watch customer expense to revenue ratios to avoid financial pitfalls
Amidst the rapid exchange of sales and procurement, keep the value of both raw materials and FGI for their products available for comparison and risk management. Gearing up to potentially flat or unexpectedly low sales volumes drives up inventory holding costs and can weaken your cash position. Customer risk is the sum of procured raw materials and non-billed FGI.
7. Highlight and quick-count ‘hot’-listed items to improve stock planning
Best-selling items can sell out quickly, especially with the continual push for holiday discounting. A good part of low-risk, rapid replenish plans is starting and maintaining a high level of on-hand accuracy for these items.
8. Solidify supplier relationships through collaboration
Implementing supplier relationship management (SRM) tools or using technology to integrate procure-to-pay and order-to-cash systems from both parties can lead to better planning and collaborative capabilities across all departments. Suppliers have better insight to meet the forecast and every member of the supply chain can produce faster fulfillment, increased regulatory compliance and higher customer satisfaction.
9. Assign a supply chain evangelist to lead the way
A Supply Chain Evangelist — an individual (or team of subject matter experts) who is responsible for coaching employees and helping departments prioritize and streamline the supply chain — can help drive supply chain integration well before the rush. Having an advocate to align supply chain strategy across the organization leads to better performance and agility that might have been previously unattainable.
10. Move to a holistic view of the supply chain
A holistic view looks at the company’s revenue activities and expense activities together into a single, overall system. When companies understand how the supply chain works beyond the transactions, stronger, partner-oriented relationships emerge.
11. Use data-driven insights for better agility and decision-making
Mid-market companies can implement business intelligence (BI) tools for real-time decision-making and insight into critical supply chain functions. Through the proper use of BI and data-driven technology — such as data sharing, tools and reporting — companies can provide operational efficiencies, build stronger relationships with suppliers, and secure better pricing during the holiday rush.
12. Minimize risk with preparation
Last minute delays or disruptions can quickly change an action plan. Prepare for potential disruptions and disasters by evaluating suppliers and establishing cross-functional teams within sourcing and procurement, supply chain, risk management, customer service and finance and management to ensure full visibility into operations and trading partners.
While there are some short term strategies that can enhance performance more immediately, this holiday season is also a good time to start preparing for next year.
Working towards seamless integration between supply chain channels begins by addressing and understanding business operations. By improving with long-term strategies and tackling more immediate priorities, companies can speed time-to-value, lower total cost of ownership and optimize supply chain functionality to meet and exceed customer expectations on a continual basis. Supply chain organizations will find that implementing and fine tuning proven best practices in advance will provide greater strategic value to the business and prevent mishaps that could cast a shadow on the most wonderful time of the year.