Conversations that center around the supply chain inevitably get stuffed quickly with buzzwords, ones that we don’t always stop to consider carefully. So when we decided to spotlight supply chain efficiency, we thought it was important to get back to basics by asking ourselves the most fundamental question: What is efficiency, really?
We turned to the Merriam-Webster Dictionary to get us started. Something that’s efficient, the dictionary stated, is “capable of producing desired results with little or no waste (as of time or materials).” When you put it that way, it’s no wonder that professionals all over the world are chasing this ideal when managing their supply chain.
If you happen to be one of those professionals who’s looking to start creating efficiencies within your supply chain, you’re in the right place. Inspired by the question that kicked off this article, we’ll present six more questions to spark inspiration for uncovering new efficiencies along the length of your supply chain.
We’ll start with another fundamental question, one that’s absolutely critical to the ultimate success of your operation.
1. Is Efficiency Your Real Goal?
Peter Drucker, the legendary management consultant, famously said: “Efficiency is doing things right; effectiveness is doing the right things.” In other words, as we zoom in on this one, specific aspect of your supply chain, it’s important to keep sight of the bigger picture. You’ll need to ask yourself questions like: How does our organization define and measure effectiveness? Through revenue goals, customer satisfaction, profit margins, employee retention—or all of them? And how can efficiencies add or detract from each of those?
For example, let’s say that you set a goal to reduce your delivery costs over the next year. You might do this by moving to a lower-cost carrier. By reducing waste around your logistics budget, you’ve created efficiency. However, perhaps it turns out that this carrier simply doesn’t perform as reliably as the higher-cost carrier. They regularly miss scheduled delivery times, leaving your customers frustrated. You might have created efficiency, but you reduced your effectiveness in terms of customer service.
So, as you continue through these questions in pursuit of new efficiencies, keep in mind what your true goals are—and the ripple effects that these efficiencies can create.
2. What Can You Track and Measure? Or, More Importantly, What Can’t You Track and Measure?
Since we’re throwing around supply chain buzzwords here, you probably knew this one was coming: visibility. We’re talking about the ability to track your supply chain every step of the way and collect that data. Before you can even consider making changes, you have to understand what you know and what you can see—and what you can’t.
After all, on a very basic level, if you don’t visibility into a particular aspect of your supply chain, you won’t have a way to measure current performance. Using the example above, if you leave it to your carrier to schedule delivery times and report back on the delivery status with no way to access that data in real-time, you might not even realize there’s an issue. Maybe you’ll get a call from a customer who’s angry enough to pick up the phone, but if you could see everything in a dashboard, you’d realize quickly that it wasn’t a one-off occurrence but a trend.
Without visibility, you can’t expect to analyze your current processes, track supplier shipments, and monitor outbound shipments if you simply can’t see or access that data. And you certainly can’t benchmark future improvement. That’s why your first step is to get visibility into as many links of your supply chain as possible. Your second will be to make this data accessible to key decision-makers. For example, a spreadsheet that’s haphazardly updated by a single person doesn’t really cut it.
That’s why it’s so important to not only have visibility into your processes but also a way to capture, store, and process that data. Even relatively simple businesses generate a tremendous amount of data—supplier orders, invoices, customer orders, inventory reports, tracking information, and much, much more.
At first, manual spreadsheets or databases may allow you to get your feet wet when it comes to managing your supply chain. However, if you want to get into the business of creating efficiencies, you’ll need the organization and reporting capabilities you can find in supply chain management software.
That’s why it’s so important to ask yourself the next question.
3. Is It Time to Invest More in Tech?
Especially if you’re starting out or if you’re a smaller company, it’s tempting to bootstrap it. Maybe you start out by filling a few gaps with a manual process, rather than investing in an automated solution. If your volume is low, this might make sense, and you might be able to make it work—for a little while.
However, manual processes are chokeholds when it comes time to scale. In a recent survey, 79% of large enterprises surveyed pointed to manual processes as their top challenge. In other words, if you plan to grow (and we hope you do!), the sooner you can phase out these processes in favor of automation, the better. Automated processes will also increase your visibility and your ability to analyze your data so that you’ll find it easier to track down the next inefficiency that requires your attention.
One more note: Make sure to tap your tech team early to help brainstorm solutions. Although some start-ups and smaller companies keep their tech professionals busy putting out day-to-day fires, create dedicated time for roundtable discussions with your tech team, who may have some creative solutions to these manual problems.
Additionally, when considering changes like these, you also might want to ask yourself…
4. Who Else Needs to Get Involved with Supply Chain Decisions?
The interdependent nature of the supply chain means that a decision along one link will naturally affect all the others. In order to make sure that the efficiencies you create are also leading to effectiveness, broaden your circle. Either get together with the executive team or an appointed supply chain committee to discuss challenges, wins, customer feedback, and potential new efficiencies.
It’s important that all the departments of your company are aligned with the way your supply chain operates. When you’re all communicating regularly, you’d know that your customer support team has received a rash of complaints about your new low-cost carrier. If you’re not aligned, your marketing and sales teams may have been bringing in new business based on promises around exceptional customer service, which could result in lost business, eroded trust, and a damaged reputation in the marketplace. However, if everyone’s in alignment, that carrier can be replaced, and those same teams will be ready to share the good news with potential and current customers.
In addition to cultivating alignment within your team, you also want to do the same with external relationships that can significantly impact your business.
5. How Can You Turn My Biggest Vulnerability into My Greatest Opportunity for Efficiency?
Your suppliers are critical to the operation of your supply chain. Uncertain delivery times, late deliveries, quote delays, price fluctuations—they all have the potential to slow you down, boost costs, and reduce both your efficiency and your effectiveness. In other words, your suppliers can often be your biggest source of risk and vulnerability.
However, because your suppliers can play such a key role in the operation of your supply chain, it’s also an area in which you can make huge strides toward efficiency. For example, negotiating a long-term contract could eliminate repeated quotes, create certainty around delivery times, and allow you to plan much more effectively, creating huge efficiencies in your operations.
Additionally, combining this with an earlier concept, greater visibility in this area could be a huge win for you. Rather than having to check manually whether this month’s shipment is on time, what if your team could work with your supplier to could set up automatic notifications that not only confirm on-time shipments but also alert you within a few hours if the notification hasn’t arrived as planned? That could save you significant time and give you an early heads-up that there might be a problem.
Ultimately, since they’re so critical to your operation, you’ll want to keep a close eye on your interactions with your suppliers. By focusing on this area, you’ll likely spot areas where you can create both greater efficiencies and effectiveness.
6. Are You Willing to Embrace the Journey?
Sailing enthusiasts say that the sport is about enjoying the journey, not anticipating the final destination.
Supply chain management is much the same, minus the sea spray. It’s an ongoing process, a journey with no real final destination. It’s all about continuous and never-ending improvement, backed with a project plan that includes milestones so you can accurately chart and monitor progress. New challenges creep up all the time. Old challenges resurface without warning. In short, the job never ends and, to be most effective at creating efficiencies, you’ll need to embrace that mindset.
That said, if you’re looking for a challenge, a job that will keep you on your toes in an industry where no day is exactly the same, managing a supply chain might be just the long-term career you’ve been looking for.
These questions will be a great start to inspire your thinking around creating new efficiencies while increasing your effectiveness. If you want to dive deeper on supply chain management, you might take it a step further and consider pursuing a certificate in a supply chain discipline.
Finally, if you’re looking for additional assistance with uncovering efficiencies within your supply chain, try a complimentary consultation with one of our experts. We’ll put our experience to work for you and offer new perspectives that can help reduce waste and boost your bottom line. Schedule yours today.