If you have ever purchased anything, ever, in your life, you have participated in supply chain management. Supply Chain Management is simply the management of the process (and all related procedures) necessary to obtain raw or wholesale goods, transport them, process, or finish them, and get them into the hands of consumers or businesses that need them.
Supply Chain Challenges
New technology, shifting markets and new customer expectations have made the already challenging job of a supply chain manager even more difficult. This is especially true for small- to medium-sized businesses that are undergoing growth or market diversification. Do any of these common challenges sound familiar to you:
Inventory management is a challenge for many companies. Too much stock and you’re looking at storage and cash flow issues. Too little and you’re likely to see manufacturing disruptions and frustrated customers. It gets even more complicated if you’re managing multiple locations (see below). Hitting the sweet spot on inventory seems impossible, but companies that manage their data well have found it.
A system that lets you track every piece of inventory—from components orders placed with vendors to assembled products delivered to customers—gives you visibility into your fast movers and must-haves. This allows you to be more flexible as customer and seasonal trends shift, which improves customer service and the bottom line.
There is no such thing as a crystal ball when it comes to supply chain management. Customers are unpredictable. Suppliers are rarely 100% consistent. And the economy is beyond your control. But accurate forecasting doesn’t have to be left to the fortune tellers. Implementing a system that allows you to view trends over months, quarters, years, or even decades will give you the intelligence you need to make more accurate decisions about what you order from your suppliers on demand, what you keep on hand, and when you need to stock up on seasonal items.
Security (Including Cybersecurity)
If you are using spreadsheets to manage inventory and customer and supplier information, you run the risk of version-control issues. Even worse is if you are sharing those spreadsheets with your suppliers and customers. Emailing documents also puts you at risk for malware, hackers, and loss of data. A system that allows you to pass information back and forth securely—both internally and externally—can prevent potential threats. You can control who sees what information, who can alter the data, and know that it’s all safe from malicious actors.
Excel and Quickbooks work well for simple operations within one building, but once you add a second warehouse or retail location, they simply can’t manage. You’re likely doing manual data integration to know what you have, where. This is a waste of time and resources. More sophisticated software lets you manage data coming from different locations much more easily. You can track inventory by location or in total, move parts to the location that needs it the most urgently, and eliminate redundant operations.
It’s unlikely you get all your components or products from one source, which means someone in your organization is spending a lot of time placing orders, paying invoices, and tracking delivery from vendors in different parts of the country, or even the world. Each of those companies has its way of doing business. And your internal departments aren’t always great at communicating with each other. Integrating data from different departments—finance, AP, inventory, etc.— allows everyone to have a full picture of a vendor relationship. Being able to customize vendor profiles within one system streamlines and automates many processes that required input at the beginning of the relationship, ongoing tweaking, and constant monitoring.
Government regulations and customer requirements can create a headache for any supply chain manager. Keeping track of all the details often falls to one or two employees who manage it with binders, file cabinets, or disparate documents in a folder on their computer. Much of it lives in their heads though, which means employee turnover puts you at risk for compliance failure. A software solution that allows you to tailor supplier and customer profiles to comply with regulations and requirements not only automates the process but also prevents human-caused errors.
But there’s hope…
Though software won’t eliminate every supply chain challenge, some solutions can ease the burden discussed above. An enterprise resource planning (ERP) solution integrates information from multiple departments, vendors, customers, and warehouses into one place. All of that data lives in one system, allowing anyone to access what they need when they need it. An ERP tool won’t make a slow supplier any quicker, but it can give you the data to see that the slowdowns are happening in the first place, and the confidence to do something proactive to address it.