Supply chains can easily fail if they meet unexpected operating challenges, which might affect both customers and manufacturers. In order to reduce this risk, you should know the main principles of supply chain management.
Improve inventory visibility
If you don’t have integrated, real-time visibility of inventory throughout the supply chain, you risk losing control.
Make sure systems are in place that enable real-time visibility of inventory across your distribution network – from supplier to customer – and that all staff know how to transfer information across corporate borders, with visibility and velocity. Also ensure your staff understand the importance of having an accurate inventory. It must be updated as a priority for each transaction, and losses or gains accounted for and processed immediately.
With modern Microsoft Dynamics 365 Supply Chain Management and principles of Supply Chain Managementyou have full real-time control over what you have in your warehouses and what you don’t.
Manage supply and demand as a flow – core of principles of Supply Chain Management
In an ideal state, there is a balanced movement of product from supplier through to customer. The store holds the required amount of product. It matches the amount in the supply chain from the distribution center to the store, and from the supplier to the distributor and so on back through to raw materials.
Aim for more frequent, smaller deliveries when trying to manage the way products are delivered. This is much better than infrequent, large bulk deliveries, and balances the flow of movement through the entire supply chain. We need to rethink the concept of minimum order quantities to remove lumpy irregular supply. This will mean the need to have a new conversation with suppliers and, potentially, logistics providers and adopt usefull principles of Supply Chain Management.
Adopt a fast, flexible pipeline planning system
The supply chain reaction time spans the period from manufacturing to when a customer purchases a product. It is almost self-evident that the longer it takes for the supply signal to reach participants in the supply pipeline, the greater the risk of the pipeline being emptied before it produces a ‘refill signal’.
Ensure the supply chain planning system can run at any time. Legacy systems create delays in signal processing. This is often due to planning processes running overnight or only at weekends because of the length of time they take, and the impact on the system due to downtime. Having a system like Supply Chain Management that can run in minutes and at any time eliminates delays and gives the ability to identify supply chain issues and quickly resolve them and ensure compliance with principles of Supply Chain Management.
Use real-time analytics to measure volatility of demand
Not all products are consumed at the same rate or time; some are consumed at a flat rate. Install real-time analytics across the entire supply pipeline. This is a fundamental requirement to manage demand and supply. Identify and group products by their volatility and use high-visibility analytics to monitor and provide real-time alerts to tightly manage volatile stock levels.
Improve forecasting models – use principles of Supply Chain Management
When developing forecasting systems, businesses also need to cross corporate boundaries to share forecasts with suppliers and collaborate in real time. Having a single shared model, where all participants cooperate to identify peaks and valleys, and determine whether they are one-off or sustained events, would assist with developing remediation strategies.
Increase the amount of available data so that you can accurately forecast extraordinary events. You can do this by looking at current forecast models and how they connect with your planning systems and develop signals to identify un-forecasted demand in real time. Also, you need to create procurement methods that have very short-term reaction times.
Diversify suppliers
Sometimes your suppliers simply can’t catch up with demand in a short space of time, bearing in mind that they had to restock entire stores and keep up with normal consumption. The only solution is to diversify. This means spreading the risk across multiple suppliers, both local and overseas. We have all heard a lot about how manufacturing has all moved offshore, based on price. Unfortunately, the downside is that in many cases we have come to rely on overseas supply, often resulting in long lead times and increased risk. However, to balance the flow, it is essential to have suppliers with short and long lead times, and even different cost models.
Create new distribution networks & channels
In modern society, we take as a given many things that can be changed. Be open to new opportunities and use systems that can ensure your long-term success.
You can learn more about the Dynamics 365 Supply Chain Management features for your business during a free consultation with our Dynamics 36 experts.
