10 Dos and Don’ts for Creating a More Efficient Supply Chain
Supply chains have been around since assembly lines and continue to be an integral part of business operations. However, what has worked well for your supply chain in the past may not be the best solution going forward.
Upon review, companies are realizing that they have fallen victim to operating through antiquated business practices. Manufacturers and distributors are realizing that they must move away from transactional vendor interactions and toward holistic strategies that provide value.
So if you are looking to make some changes and want to make sure you are moving in the right direction, here are 10 dos and don’ts of evaluating and optimizing your supply chain.
1) DON’T take a transactional approach.
Salespeople in transportation have a reputation for taking a transactional approach to acquiring business. Specifically, in logistics, sales reps would approach potential clients and offer collateral in exchange for using their services. This is problematic because it only identifies savings for certain moves or modes of the supply chain and does not seek to lower the company’s overall costs. The company selling the service usually wants the one portion of the supply chain that fits into the model under which they operate. In short, they want to make money, not help you save money.
2) DO take a holistic approach.
To lower overall savings and costs, you should look at the big picture. One of the most powerful tools any company can employ is strong negotiation skills. By involving the leaders of your company in the strategic process, you can leverage your whole spend to obtain better deals. For instance, are you using your entire freight spend to find savings? You may want to balance your small parcel spend with your LTL utilization, which can drive your overall price down. Since this involves strategy, leaders need to be involved so everyone can be a part of the solution.
3) DON’T forgo data integration.
It is hard to believe, but some shippers still write their own Bill of Ladings (BOLs) because they have no system capable of either providing the data on-demand or joining together with their provider to integrate the process. This also holds true for some companies that have utilized a semi-integrated process (e.g., hand-typing each freight shipment into a non-integrated platform), which could be a time suck for your staff.
4) DO use an automated EDI integration process.
Today there are numerous automated Electronic Data Interchange (EDI) Integration processes and services. Many outsourced logistics partners can integrate into multiple types of ERPs to accelerate their clients’ order to ship time speeds. In addition, this reduces the risk of human error and resource time.
5) DON’T lack visibility.
Prior to the last 15 years, a shipper sent products and called the provider every few days to confirm if freight was delivered. Between delivery and documentation, it could take another three weeks to receive backup. (Holy inefficiency!) Some companies still do it this way, which is friendly, but a relatively unproductive system - and it becomes extremely problematic when it causes customer dissatisfaction that leads to loss of revenue.
6) DO leverage real-time data visibility.
By using an automated transportation management system (TMS), real-time visibility and data integrity become assets to your business. A platform that raises visibility helps manage customer expectations and creates a higher rate of satisfaction. Additionally, if there appear to be any issues throughout the lifetime of the shipment, these can be addressed right away and minimize the risk of other potential issues that could come to light as a result. Through this process, real-time updates and delivery documentation are a breeze.
7) DON’T accept chargeback fees as the cost of doing business.
Sometimes companies shipping products are found to be out of compliance by those accepting the items. A receiver may find your company to be out of compliance for many reasons including receiving your products later than the due date or the Proof of Delivery (POD) was not signed. Both issues seem like understandable reasons to accrue penalties, but what caused the shipment to miss its due date? Why wasn’t that POD signed? Most companies chalk up these charges as just part of the process for what they do and pay the fees rather than ask questions. In reality, these fees can be avoided.
8) DO investigate chargebacks and penalties, and read through all policies.
It is extremely important to be aware of all your customers’ receiving policies and rules pertaining to due dates, receiving procedures, and accessorials expectations. This includes documentation from proof of delivery to damages. Once you are aware of all the policies, review all fines, chargebacks, and penalties you have or are receiving to understand the justification for these deductions. While your company could be found out of compliance for many reasons, it is quite possible that you, as a shipper, are not at fault. Instead, a policy of the receiver or carrier is causing the non-compliance issue to occur. A good portion of these fees can be eliminated with systemic fixes. If you are working with an outsourced provider, may sure they take the time to review the instances and investigate along with you.
9) DON’T only involve one part of the company in the supply chain solution.
When you limit involvement to a portion of the company involved in the supply chain, it can be extremely difficult to bring others up to speed on what is going on. When you require a specific department’s assistance, you will likely lack the means to get the right players in place in a timely manner. So instead, include everyone involved to ensure there is proper communication and adequate buy-in.
10) DO use a top-down solution.
It is in your best interest to inform and include everyone in your company about how your supply chain operates and is maintained. This may include sharing your strategy and goals with not only your outsourced provider, leaders, and shipping department, but also your finance, customer service, and sales departments, among others. Without a top-down strategy that allows information to flow to all, you may find it difficult to pull value from the above-mentioned suggestions.
Leave the Old School Ways Behind
Start moving toward a holistic approach to your logistics. Push your business to outgrow some of the don’ts in your supply chain so you can remove the challenge of working with antiquated practices and instead, gain a competitive edge.