The only way companies are able to survive in today’s market is by being able to meet customer’s demands in a rapid and efficient manner. When you analyze the most important aspects of a company’s performance, you will most-likely come up with quality and efficiency as being the most important indicators. The truth of the matter is, that as companies grow and are more concerned with staying competitive and positioning themselves in the market, so does the complexity of their logistic operations and the need to invest in keeping these standards to a higher level. More than half of supply chain related projects fail and if we add to the equation those projects that are supported by specialized software, then the failure rate is even higher. Why is it that makes it so difficult sometimes to maintain a supply chain in good working order? What are the most common complaints by partners for the relationship between links of the supply chain to fall apart? Is there anything that you can do to avoid these common mistakes and to take responsibility when it comes to your piece of the supply chain failure pie? Today we want to take a very general look at this issues here at David Kiger’s Blog in order to see the big picture and identify which of these mistakes can be solve at the management level and what type of contingencies can be put in place in order to avoid becoming just another statistic of what goes wrong in the supply chain.
Communication takes the number one spot on our list because it happens to be the number one reason listed by most 3PLs and customers in surveys about why relationships between these different parties deteriorate. Communications seem to be an area of poor performance on many different fronts when it comes to looking at companies with logistics failures. Not only are customers kept in the dark over the status and location of their products, but also are suppliers and external transportation services working for the company. This lack of transparency is instrumental to the deterioration of supply chain relationships and the entire logistics portion of the operation. Obstacles, delays and even operation under normal circumstances should always be communicated through different channels to all parties involved.
Where are the experts?
Very rarely you can find companies able to do it all. So much time and effort are often wasted by companies that are too small to do everything, but who think that it will save them money to be the one stop solution for all of their logistics needs. The problem with this approach is that it is almost always counterproductive when it comes to smaller operations and they are better off by simply trusting the experts and partnering with companies specialized in that specific portion of the supply chain. Specialized partners have been doing their job for a long time and more often than not, have tailor-made solutions for different size of operations. Companies sometimes are afraid to even research because they believe they are too small for a large brand, but they will be surprised to find out that in the end, trusting the experts will save them a lot more resources. Do not jeopardize service because you think you will be saving money early on. The trick is to understand when you can do it yourself and when is best to trust the experts.
Lack of risk management strategies
Many things can go wrong in an engine with so many moving pieces like it is the case with logistics operations. The problem is that since these types of issues are not part of daily operations, people have a tendency to forget about them and fail to properly plan for when things go wrong. The market is volatile, the weather is fickle and geopolitical unrest can strike at any time around the world. Are you ready to deal with these issues? Risk management strategies are incredibly important, but the problem is that people will often learn this by the time it is too late.
Real-time metrics are incredibly important when it comes to forecasting. Stay away from using historical trends to make forecasts as this data is not the most reliable in order to make your predictions. Real-time metrics allow you to have a true view of the market and monitor the real data you need to make your adjustments. Metrics and logistics should always go hand in hand in order to ensure success.
Slow shipping and lead times
The worst part of this is that in most cases it isn’t even the company’s fault. So here we go back to that point of properly planning in order to avoid this type of surprises. In a market dictated by supply and demand, you must be able to meet the demand quickly and effectively or you will suffer the consequences. Remember is all about getting the right product to the right customer at the right time; all of it.
* Featured Image courtesy of Scottish Government at Flickr.com