A supply chain is a series of steps and departments through which an item passes between manufacture and retail. Supply chain improvement is activity designed to make the processes and departments involved in the supply chain work more efficiently. This can include reducing costs, speeding delivery or improving accuracy. Tips for supply chain improvement include carefully evaluating the process from start to finish; managing labor; and developing a sound, fact-based strategy for maintaining inventory levels.
Before supply chain improvement can begin, the existing process must be carefully and objectively evaluated. All steps within the process, including production, warehousing and transportation, must be investigated, documented and analyzed. Each employee's job should be detailed to include administrative functions as well as on-floor duties. All automated functions should be evaluated and documented as well.
Once the entire process is documented from start to finish, it should be analyzed to identify potential areas of improvement. Managers can look for red flags, such as shipments of partial truckloads, inventory run-outs and excessive employee overtime. Once these improvement areas are identified, managers can develop a plan for addressing the issues. Improving problem areas will contribute to overall supply chain improvement.
Managing labor is a critical step in effective supply chain improvement as well. Production and warehouse workers are an important part of the process. Ensuring that they have all the tools, training and experience to perform their jobs can affect the overall success of the supply chain. Best practices can be determined by interviewing the most efficient workers to find out how they do their jobs. These practices can then become policies for other workers to follow.
Maintaining inventory levels is another important part of any supply chain improvement effort. Most manufacturers maintain minimum inventory levels, sometimes called safety levels. These are the levels at which an alert is sent to production to create more merchandise so inventory does not run out. If these levels are set too low, the manufacturer may run out of merchandise, causing costly delays and partial shipments. If the levels are set too high, merchandise may be produced well before it is needed, tying up capital in goods that have yet to sell.
Managers can evaluate usage histories to determine if levels are set correctly. They should take seasonal highs and lows into consideration and may wish to adjust the minimums accordingly. Once minimums are set, they should be frequently re-evaluated and adjusted as necessary.
