Thought Leadership

The 5 Habits of Highly Effective Supply Chains

Highly effective people are living in our supply chains and we can learn much about their habits and apply them to our practices. While the first book donning the Seven Habits of Highly Effective People moniker arrived in 1989, we’re in need of a refresh for our supply chains after recent economic struggles.

While we look at five areas where you can introduce good habits into your supply chain, it’s important to remember that changes must have management buy-in and be presented as something to benefit everyone in the company.

You need to frame the story as a way to improve everyone’s day and reduce company-wide headaches, because this spurs adoption faster than simply delivering a memo full of mandates.

They Focus on Inventory

Inventory has becoming a target in every supply chain because holding costs were one of the hardest to mitigate during recent economic upheavals. Holding inventory comes with warehouse space costs, insurance, sometimes increased taxes and the chance what’s on hand will expire or become obsolete.

This has pushed investment into forecasting models and planning processes that focus on delivering goods as needed and pre-staging in areas where costs are lower. Financial groups are scouring over supply chains to cut working capital needs and inventory almost always appears at the top of that list.

They Embrace Complexity

Even under lean logistics policies, supply chains are becoming more complex. There are more platforms to integrate, load boards to watch, equipment to update, and many, many more. For large projects, these concerns multiply very quickly.

Supply chain professionals that expect this complexity and try to predict the challenges that will come are typically better able to handle those concerns. Risk modeling needs to include delays in every step of the process, from document inaccuracies to shifting modes when lanes become unavailable.

Understanding the complexity of your supply chains allows you to add checks and verifications in appropriate parts, locate areas where you need additional transport options, and standardize processes to address concerns that have occurred in the past.

They Are Involved Early

Procurement is long and involved process, and the quicker your team is clued in to the process, the better you stand to control your supply chain and mitigate any losses. Creating a structure where project teams are involved early on allows supply chains to link previously disparate parts together.

Sourcing is a main area of advantage with an early integration. By aligning engineering with contracts and project schedules, companies can ensure that they have a steady stream of quality materials and introduce checks for product or part defects. Early involvement of all relevant teams allows your supply chain to quickly manage interruptions and have sources in place to address changes, loss, or irregularities that partners introduce.

They Are Sustainable

Sustainability isn’t just about being green—but that does seem to help these days. Supply chains need to be sustainable in the more ancient sense of the word: able to be maintained consistently at a certain rate or level of production.

The most essential piece of creating a sustainable supply chain is to standardize your processes, from procurement through all the fires you’ve put out in the past. You must take time to create a process that your employees can walk through whenever an issue arises, or their impulsive solution to an immediate problem could be detrimental—at very least, it’s almost impossible to repeat unless you have automatic documentation throughout the reaction.

Another good part of creating a sustainable practice is that you can benchmark against it. You’re creating a smart baseline that you can adjust as problems repeat. If you find a great solution to a common problem, you can turn that answer into a management practice that’s instilled through training.

They Write It All Down

All of these best practices are great when they become policy. To cement them as policy and ensure that it’s followed throughout your operation, it’s time to write them down and share the document with your team leaders. A written strategy gives everyone a clear indication of what’s needed and required, plus it allows for accountability.

When penning your strategy, remember that it’s a living document. It requires the ability to grow and evolve with your business because plans often change. You’ve got budget documents and projections that must be updated; it’s time to add your strategy to that same list of items to review.

When all is said and done, and written down, this will help you guide all of your operations and give you a strong way to start benchmarking plus address future shortfalls or resource shifts as they happen.