Common Supply Chain Errors and How to Avoid Them

If you’re a manufacturer, supplier or retailer, supply chain management is a big part of your business. However, if you have too many orders and clients to deal with, you can easily make mistakes without noticing. The following is a list of common supply chain faults and how you can deal with them.

 

1. Choosing Too Many Vendors

Mistake

Launching a new product is exciting for a startup. You’ve had the idea for a while and now you get to see the end result. The mistake that new companies make is giving their products to multiple suppliers because they want to reach more people. Doing so can be costly because you’ll have to monitor multiple supply chain processes for all the suppliers. It can be exhausting and lead to inefficiencies.

Fix

Instead of partnering with many suppliers, just stick to one reliable company.

 

2. Failing to Prepare for the Unexpected

Mistake

Who thought that the world would come to standstill in 2020? The COVID-19 pandemic was unexpected. Many businesses have suffered because they didn’t have a plan to mitigate the disruptions. It’s a common mistake for logistic companies to fail to have a good risk management strategy. For example, there are businesses that were forced to close down despite mitigating the risk early and laying off employees and cutting costs.

Fix

Your business should have a comprehensive risk management plan. It should cover all aspects of the business disruption. For example, if the first action is to lower costs, how will the business handle a reduction in orders? The next action is to reassure the customers that you can still deliver their goods and follow the recommended safety precautions. That’s how comprehensive your plan should be.

 

3. Bad Cost Management Strategies

Mistake

Business expenses are your greatest enemy. They eat into your revenues and reduce profits. The mistake that logistic companies make is failing to reduce the costs appropriately. For example, they’ll invest in new technology to reduce supply chain inefficiencies. However, despite reducing the overall operational costs, the expenses remain substantial.

Fix

The best way to reduce expenses is to reduce the number of stages in the supply chain. For example, instead of receiving the products from manufacturers and unloading them, checking that they’re in good condition, and storing them as you wait for orders from retailers, why don’t you just deliver them straight to the retailers from the factory. You don’t have to pay for storage if you can hand them over immediately.

 

4. Poor Cyber Security

Mistake

The biggest challenge for modern network technology is cyber-attacks. Unfortunately, companies in the supply chain industry have poor network security. They have not invested heavily in securing the network. As a result, sensitive customer information is stolen by hackers.

Fix

Your company should have solid network security protocols. Limit who has access to order information. One person should be responsible for tracking all deliveries. That way, you can hold them accountable if there’s a mistake. Employees should also avoid using unknown networks to access sensitive company data.

 

5. Failure to Utilize Data

Mistake

Supply chain management is more than just delivering goods from the producer to the retailer and final client. The mistake that companies make is focusing too much on the inventory aspect. They forget or downplay other important data like the cost of raw materials, machine maintenance costs, supplier contracts, website traffic, consumer purchase behavior, social media messages, and other information.

Fix

Failure to analyze and interpret all information at your disposal is wasteful. Firms should pay more attention to all the data that’s available to them.

 

6. Bad Customer Experiences

Mistake

Your business depends on the customer and not the other way round. Unfortunately, most logistic firms think that they’re doing the client a favor by delivering the goods to them. These firms will take forever to refund the customer for a returned product. As a result, they lose customers in the process.

Fix

Logistic firms should improve their customer services. They should follow up on returns and inquiries to make sure that the customer is satisfied.

 

7. Failure to Share Crucial Information

Mistake

Traditionally, the management of a company has always had control over all the information. It’s common behavior for managers to withhold crucial information from employees because they think it’s not necessary. Such companies have information silos. Running your business this way leads to distrust and a lack of cooperation from workers. They won’t be united and that can affect productivity.

Fix

You should allow employees from different departments to share information that may be useful to them. Build a culture of trust and working together.

 

8. Failure to Cultivate Good Supplier Relationships

Mistake

The suppliers help deliver the goods to your business premises. Sadly, most firms treat the vendor relationship as a transactional one and nothing else. To them, all that matters is getting the goods at a discounted price. When you don’t have a solid relationship, you can’t consult the supplier on pertinent issues related to the product. It also becomes difficult for you to negotiate price reductions.

Fix

Work on building a solid partnership with your vendors. Tell them your goals and let them know what you expect from them. Create a win-win relationship that allows both of you to benefit.

Use the above tips to get rid of inefficiencies in your supply chain network. You should also avoid the mistakes mentioned on this list because they can be costly. Keep up trends in the industry so that you can take advantage of them.

 

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