Picture this. You wake up one morning, head to the office, sit down with your morning coffee and check the orders that came in overnight. That’s when you see it.
It’s one of those orders you’re always hoping for in the back of your mind. One of the really big ones that make a significant contribution to your company’s annual turnover.
The rest of your staff arrive and promptly start making the calls. But wait, there’s a problem… One of your suppliers can’t make an essential contribution to help fulfil that huge order.
The crippling reality of your sluggish supply chain hits you. It’s time to implement some supply chain agility best practices.
Perform due diligence to find the right partner for the long term
Getting the right supplier matters. Naturally, you must protect your bottom line so price is critical, but the major temptation to choose a supplier on price alone can land you in trouble. Let's say you opt for one that offers products or materials 5% cheaper than the closest competitor.
At first, you’re happy about saving 5% on the purchase price. But later, you realise that a little additional research would have highlighted a number of problematic qualities with your new supplier such as long lead times, high number of RMA’s or slow response times. None of which are properly compensated for by your 5% saving.
Always do your due diligence research before signing up with new suppliers. Look for testimonials from people who’ve worked with the company in the past to make sure their service is as competitive as their prices.
You should be especially vigilant when signing on international suppliers. You need to understand a country's logistics landscape because the last thing you need are problems happening on the other side of the planet. For that reason, it’s crucial to contact people with inside knowledge of both the country and the supplier you’re considering.
A little time extra spent here can save you a fortune in long run.
Consider refund and returned items costs
Depending on your industry, refund and returned item costs can accumulate into serious amounts of capital getting tied up. If you were to opt for the cheapest possible partner to get a 5% saving purchase prices but there return costs were high, the cumulative expenses could make that 5% reduction in purchase price irrelevant.
This is especially true when large equipment is involved that must be transported using specialist international logistics companies. So, pay extra attention to this factor when you research your new suppliers.
For new products, involve suppliers in development to ensure quality
Dealing with suppliers who are also involved in the development of products is a great way to ensure quality. Having your supply chain bogged down with quality issues is far from ideal when you’re focused on improving agility.
By working with partners involved in development to ensure a high quality product, you’re making an investment in the robustness of your supply chain, allowing it to be more agile too.
Create clear, easy to read contracts
There was a time when lengthy contracts and plenty of small print were a necessity for supply chain management. But, these days, the internet with its review websites, social media and more easily spread word-of-mouth holds businesses much more accountable for their actions.
Consequently, a clear, easy to read contract is a necessity. Should any kind of disagreement become apparent, the last thing your supply chain needs is for legal teams to get involved and tackle disputes.
Nothing will slow down the supply chain quite like a courtroom. Agile supply chains should respond quickly to shifts in demand both between you and your supplier as well as from you and your customer. So a straightforward contract with a well researched supplier is the way to go.
Review issues as they emerge to create fast response
Issues with your supply chain should be dealt with as when they arise. Sure, it’s tempting to add them to your to-do list as something that needs tackling later down the line. However, the longer these problems are left unchecked, the less agile your supply chain can become.
Make sure you tackle issues as they arise and implement processes that eliminate any points of delay. Because, after all, you never know when one of those huge orders is just around the corner.
One of many reasons Mawson Global saved our clients over $20 million in the past 12 months is because we take supply chain agility very seriously. Next year, we’re expecting that figure to grow. If you’d like to find out how much your business could save, get in touch for a QuickLook analysis, free of charge.
