Supply chain management is, in some minds, an occupation about ensuring the company keeps running smoothly. There are some elements of sustainability and risk management involved in the role, but most people zoom in on the importance of ensuring the company gets the goods it needs to continue operating, and distributes goods and services in a way that’s valuable for customers.
However, it’s also important to realize that supply chain management is a critical area of opportunity for minimizing costs—and therefore, maximizing profitability.
As explained by Printing Center USA, “If you’re buying materials from other businesses and individuals, that transaction should be the first link in the chain you improve.” Most businesses don’t operate along the full length of the “supply chain,” producing raw materials, refining them, finishing them, and shipping off the results. Instead, you likely rely on at least one vendor to procure the materials you need to operate. Your supply chain managers should be at least partially responsible not only for finding your vendors, but also improving your relationship with them over time. From the onset, a good choice in vendors can set you up with better pricing, and as your relationship matures, you might even gain access to other perks along the way.
Software and Efficiency
Most modern supply chain managers rely heavily on supply chain management software, like the platforms offered by SAP, to assist with their responsibilities. Your choice in this software affects not only which insights you gain into the effectiveness of your supply chain, but also how much time you spend making those assessments. Ideally, you’ll gain a platform that allows you to track multiple data points related to the cost efficiency of your operations, and one with a user interface intuitive enough that it doesn’t take you hours to accomplish your tasks.
One of the biggest challenges in supply chain management is finding the right talent for the job. If your goal is to cut costs, this is important for several reasons, both inside and outside of the supply chain management department. First, you’ll need to make sure you hire the right supply chain managers; you need people who are committed to improvement, active, and preferably experienced in multiple disciplines. At the same time, you’ll want to avoid overpaying for your team, or you’ll negate any cost savings you might enjoy from their presence. Next, as a team, you’ll want to pinpoint areas where new or better talent could make a substantial impact on your company’s performance—especially in operations and other areas of logistics.
In the words of Henry Ford, “If you think of standardization as the best that you know today, but which is to be improved tomorrow; you get somewhere.” New supply chain managers entering a company with an established workflow are going to be reluctant to make any major changes, but change should be viewed as the central tool for workflow optimization in a supply chain management setting.
Only by making tweaks and changes will you be able to find new ways to improve operating capacity, ship faster, and reduce costs. Start with one process at a time, no matter how small or seemingly insignificant it is, and work your way to broader, big-picture workflows over time.
Supply chain management is complex, and reducing costs isn’t a process that can happen overnight. Still, with the right software in hand and a motivation to improve efficiency, any experienced supply chain manager can make meaningful strides toward total optimization.