A supply chain is defined as a flow between a company and its suppliers to produce and distribute a specific product to the final buyer. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.
From the company that supplies you with raw materials, to your outsourced marketing services, logistics services and other stakeholders, these organizations make it possible for you to do what you do best and make a profit. It is often said that in the highly globalized and competitive business environment we live in today, competition no longer exists between which individual firms.
Competition rather exists between supply chains. Every second it takes for your supplier to deliver your inputs to your factory counts as money lost or gained.
A good operations manager will account for every minute it takes for the supply chain to flow and ensure that inputs are transformed into outputs with as many mitigated risks as possible.
1. Make a list of all of your business’ stakeholders.
What a stakeholder is essentially is every one that is directly or indirectly affected by the operations of your business. Examples would be your employees, government, suppliers, customers, trade unions and other groups that are, at some point in the lifespan of your business, in contact with you for different reasons.
To even begin to build a strong supply chain, make a comprehensive list of who is required for certain parts of your production process. Perhaps you lease equipment to make your products from another company or you outsource your marketing services. All of these stakeholders will affect how effective, fast and successful your company is.
Once you’ve made a list of all these stakeholders, evaluate their performance capabilities thus far and create metrics to determine whether your supply chain is boosting your company or creating a lag for your company.
2. Identify areas where suppliers are needed.
While looking at your production process, calculating how much your plant, equipment and other resources are costing you and whether those are being procured as best as they should be, you may identify areas where you may need to seek the services of another organization that could be performing that function faster, better and at a cheaper cost than you. At some point, we should admit that we cannot do everything by ourselves and that adding additional suppliers to our supply chain is necessary.
You may even end up saving more money when hiring niche-specific firms to perform different duties for your company. Remember, competition is between supply chains. Build a strong supply chain and watch your business deliver value for money.
3. Strike a balance between rigidity and flexibility
Covid-19 disrupted the day-to-day operations of a plethora of supply chains globally. The rise in international trade, mainly through the cheap production costs in countries in East Asia had led to many businesses in South Africa shipping their inventory from China, Taiwan and other major Asian countries. When the pandemic hit, many businesses were left with obsolete stock and struggled to meet consumer demands. this had a very negative impact on businesses. This taught businesses an important lesson about building a supply chain that had the certainty of on-time delivery, lower production costs and profit maximization while being flexible enough to still cerate value even in the midst of lockdowns and restricted movement. Always have a list of local suppliers on hand that you can engage with should international travel be banned again or should the movement be limited. Control what you can and leave the rest to the forces of the market.
At the end of the day, your client won’t be bothered about your supplier delivering your stock late. In an age where consumers have a wide choice of businesses to purchase form, if you do not have the required products on time and at the best quality, you will lose your client. Therefore, building your supply chain must be a project that operates in perpetuity. Even if you have a reliable supplier now, keep scouring the market to calculate how much more money could you save by getting an even better supplier, distributor and other service providers.