Keeping the supply chain efficient and effective is a top priority across industries - and neither as easy nor as straightforward as it may seem. With market variables and best practices changing around companies, it's not uncommon for long-held strategies to fall behind the times.
One of the main problems that can afflict a supply chain operation at a company of any scale and description is a lack of self-reflection. Organizations that lose track of their own operations may end up surprised as competitors take the lead in their industries.
The importance of this kind of active supply chain is only increasing as businesses turn more to their logistics operations as sources of value. Organizations getting strategic and monetary advantages from processes spanning sourcing to delivery will have a natural advantage over others that cannot optimize their operations.
Degrading over Time
As Supply Chain Digest editor Cliff Holste opined in a recent column, a company's order-fulfillment efforts can break down slowly over time, when leaders aren't paying attention. Inefficiency creeps into the fabric of day-to-day practices and damages the organization's ability to generate value, but it accumulates so slowly that the issues are imperceptible until they've caused significant damage. He referred to this symptom with the old idiom "death by 1,000 cuts."
Holste recommended implementing continuous improvement initiatives for every operation from receiving and picking to shipping. If employees are collecting streams of data about all of these processes and working on strategies to make them better, there's less chance of them falling into neglect. Adopting modern tech tools may also help prevent distribution center operations from backsliding into inefficiency. Warehouse management systems and automation have undergone increases in functionality in recent years, and the latest models could be hugely helpful.
As for single variables order-fulfillment teams can use to determine whether they've let their practices slip, Holste pointed to processing time. When a company gets an order, it should turn that around and ship the goods within a day. If the business can't perform quick turnarounds, it's likely time to ask which of its processes is holding the supply chain back, and what step of the process is bogging down.
Supply chain operations that fail to improve are effectively moving backwards, as the logistics expectations of consumers steadily rise. A Lane Report interview with Verst Logistics CEO Paul Verst touched on the demands being placed on companies in light of Amazon's one-day delivery promises. Organizations making, selling and delivering products of all kinds are now in active competition with some of the world's biggest brands, and their ability to tune up their order-fulfillment operations may determine their fortune.
Millennial buyers have spent a significant percentage of their consumer lives with quick and effective shipment options. These young people are becoming primary earners in households and taking purchasing positions at companies making B2B orders. This means organizations whose logistics operations can't keep up with the velocity and accuracy millennials have come to expect may find they've lost their appeal. With transformation everywhere, becoming antiquated is a real risk.