Mistakes are inevitable and some mistakes can be a liability for companies. It is advisable that companies or organizations are aware of the following eight common supply chain mistakes as well as how to avoid them:
Lack of Supply Chain Transparency
According to Chris Kushmaul, a frequent supply chain mistake companies make is operating without complete end-to-end visibility into their supply chains. Companies should always have knowledge of where their materials originate from, the locations they will have to pass through, where the distributors are located, and where finished goods will be transported to.
Ignoring Supply Chain Data
The most valuable commodity for a company is data according to Akhil Oltikar who is the vice president of supply chain solutions at Riverwood Solutions. Oltikar says that every minute in operations and supply chain management generates data- whether it is testing a product, transactions, pricing agreements, logistics, material costs and even implied data such as email communications between employees. Therefore, companies need to be smart about choosing data that can be useful in making better business decisions- this will help them create appropriate strategies for capturing, storing and data analysis.
Not Planning for Business Disruption
Many businesses are unprepared when faced with disruptions and this can negatively impact their bottom lines. Jeff Karrenbaur- who is the president of Insight, Inc- advises companies to always be prepared for business interruptions through having a “risk management and resilience plan”. Karrenbaur also advises businesses to perform rigorous analysis of the supply chain network to discover its vulnerabilities and manage risks.
Choosing Too Many Partners or Going Too Lean
Brand owners who do not have a tight process control system, support infrastructure and a huge upfront demand for new products, should avoid launching a new product at the same time with multiple suppliers- this creates complexities that can cause an increase in the risks brand owners aim to mitigate.
Launching with a multiple contract manufacturer leaves the brand owner with having to manage everything twice which is a costly complex process. Managing the complexities introduced by launching a new product at multiple contract manufacturers may slow processes down and causes more problems than it solves.
In Karrenbauer’s view, “The leaner the supply chain, the more changes need to be to be done to get up to speed.” Lean supply chains are popular for companies trying to control costs but Karrenbauer also says, companies with lean supply chains can be caught unaware if there is a sudden change of demand.
Karrenbauer further added that the average loss from supply chain disruption alone can cost millions of dollars and that if companies focus their supply chain goals on lean, their supply chains will become weak and susceptible to failure from even the slightest event, such as losing a supplier.
Lack of Cyber and Physical Security Controls
Companies experience a constant breach of security in the industry and there seems to be a lack of intellectual property security measures in place. Ray Winkel, supply chain manager for MBX Systems, suggests that vendors serving the supply chain should secure their networks through practices such as using SFTP (secure file transfer protocol) for file transfers, restricting access to imaging servers to all but authorized users. Also, companies should make use of a version control system to track and report changes to each image deployment routine.
Companies are also often unaware of product tampering, companies should make use of locks and seals to protect their products from such risk and make it easy to identify any tampering. Companies should also use access control procedures and have accountability protocols in place to track product activity, including who is responsible for it.
Lack of Optimized Business Processes
Small business owners do not pay much attention to monitoring the steps that come before a product enters their business or what happens if that product should be returned after it’s been sold. Dimitris Athanasiadis- COO of Megaventory.com- believes that this is the first step in creating a successful supply chain.
Not Aligning Application Design to Business Strategy
To address the failure to properly understand and be aligned with the business strategy, Bob Derocher- who is the principal of The Hackett Group- proposes that there should be a link between the selection and the design of applications to specific features of the business strategy. For example, “if the company plans to grow by acquisition it will be important to select a package that is scalable across multiple different business models and can be quickly implemented in an acquired business.”
Not Creating Effective Vendor Relationships
Sue Wilson- the vice president of supply chain management for Toshiba America Business Solutions- says companies should not only consider the price factor when negotiating with vendors. Also, companies should be careful in considering other areas such as: performance and customer service. Wilson says the goal is to look for a vendor that does not just offer lower price, but a vendor that is willing to be a partner and offer solutions to assist with possible supply chain issues.