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Faizan
Supply chain management refers to coordinating all of the processes, procedures and systems necessary to make and deliver a product on time and on budget. While this might not seem like an important concept for small businesses, even a local restaurant, caterer or T-shirt company can benefit from understanding what its supply chain is and managing it proactively to avoid delays in shipping or service.
The Supply Chain
A supply chain starts with the materials needed to make your product. If a caterer doesn’t get her fruits and vegetables delivered, she can’t start the process of making the food for an event. In addition to your materials, your supply chain includes the way they are delivered to you, how you store them, how you move them around your business, how orders are logged into your computer system, and how you deliver finished product. The supply chain also includes the people and systems you use to manage your production and delivery process.
Demand Forecasting
To prevent logjams or delivery problems, businesses try to predict their busy and slow periods. This strategy, known as demand forecasting, uses historical data, customer surveys and sales projections to determine when the company will be busy and when it will have fewer orders. When the company spots busy periods, it takes steps to hire more staff, maintain more capital on hand and pre-produce inventory. By making product before it is needed, the company can ship orders as they come in, rather than making the customer wait while the product is made.
Levelized Production
Some companies manage their supply chain by using levelized production. With this strategy, the company makes roughly the same amount of product each month, regardless of demand, so that it can keep its expenses and inventory constant throughout the year.
Just-in-Time Production
Using a just-in-time supply chain management strategy, businesses try to project as accurately as possible when they’ll need to ship orders and manufacture inventory at that time. This allows the company to reduce expenses, such as interest on credit used to buy supplies and pay workers. If a company makes inventory months in advance, it’s paying interest on the credit it used to create the product that winds up sitting around in storage.
Inventory Management
Using even a simple Excel spreadsheet can help you create and manage a basic supply chain for your business. Create fields that list what supplies, materials and finished product you have on hand. Set benchmarks that require you to order more supplies or make more product when your materials or inventory fall below a certain level. Update inventory levels each time an order ships so you don’t think you have more on hand than you do.
Vendor Management
Even if you do everything correctly on your end in terms of managing your supply chain, the people you rely on can disrupt your sales. Don’t assume that when you get a big order, your suppliers can get you what you need to make and fulfill your demand. Always have a backup plan for each vendor, including the people who sell you materials to make your product and the companies that deliver your products. Any time you get a big order, call your vendors and suppliers as soon as possible to let them know about your needs, so they can order and prepare what they need to serve you.
Customer and Distributor Management
If you have regular customers or distributors, work with them to ensure you can deliver what they need, when they need it. This includes customers who buy directly from you, and retailers and wholesalers who sell for you. They have many other partners they work with and might not manage all of them well. Customer and distributor management helps you decrease the number of last-minute orders you get, which you might not be able to fulfill in a timely fashion.
The Supply ChainA supply chain starts with the materials needed to make your product. If a caterer doesn’t get her fruits and vegetables delivered, she can’t start the process of making the food for an event. In addition to your materials, your supply chain includes the way they are delivered to you, how you store them, how you move them around your business, how orders are logged into your computer system, and how you deliver finished product. The supply chain also includes the people and systems you use to manage your production and delivery process.
Demand Forecasting
To prevent logjams or delivery problems, businesses try to predict their busy and slow periods. This strategy, known as demand forecasting, uses historical data, customer surveys and sales projections to determine when the company will be busy and when it will have fewer orders. When the company spots busy periods, it takes steps to hire more staff, maintain more capital on hand and pre-produce inventory. By making product before it is needed, the company can ship orders as they come in, rather than making the customer wait while the product is made.
Levelized Production
Some companies manage their supply chain by using levelized production. With this strategy, the company makes roughly the same amount of product each month, regardless of demand, so that it can keep its expenses and inventory constant throughout the year.
Just-in-Time Production
Using a just-in-time supply chain management strategy, businesses try to project as accurately as possible when they’ll need to ship orders and manufacture inventory at that time. This allows the company to reduce expenses, such as interest on credit used to buy supplies and pay workers. If a company makes inventory months in advance, it’s paying interest on the credit it used to create the product that winds up sitting around in storage.
Inventory Management
Using even a simple Excel spreadsheet can help you create and manage a basic supply chain for your business. Create fields that list what supplies, materials and finished product you have on hand. Set benchmarks that require you to order more supplies or make more product when your materials or inventory fall below a certain level. Update inventory levels each time an order ships so you don’t think you have more on hand than you do.
Vendor Management
Even if you do everything correctly on your end in terms of managing your supply chain, the people you rely on can disrupt your sales. Don’t assume that when you get a big order, your suppliers can get you what you need to make and fulfill your demand. Always have a backup plan for each vendor, including the people who sell you materials to make your product and the companies that deliver your products. Any time you get a big order, call your vendors and suppliers as soon as possible to let them know about your needs, so they can order and prepare what they need to serve you.
Customer and Distributor Management
If you have regular customers or distributors, work with them to ensure you can deliver what they need, when they need it. This includes customers who buy directly from you, and retailers and wholesalers who sell for you. They have many other partners they work with and might not manage all of them well. Customer and distributor management helps you decrease the number of last-minute orders you get, which you might not be able to fulfill in a timely fashion.
Posted in: Products & Brands
