How Manufacturers Can Strengthen Their Supply Chain
The COVID-19 pandemic created enormous supply chain issues for companies across all industries. While there has been progress in many areas, disruptions and bottlenecks continue to stress supply chains. Learning how to create a more robust supply chain strategy can help manufacturers avoid these issues while keeping costs low.
This post will provide suggestions for how to improve supply chain strategy for U.S. manufacturing companies, suppliers and retailers.
6 Tips for Improving Supply Chain Performance
These six tips can help you optimize your supply chain management strategy.
1. Modernize Your Operations
Many manufacturing companies still rely on outdated forms of data gathering, such as spreadsheets. While programs like Excel worked well in the past, they limit manufacturing companies by reducing agility and visibility.
Embracing digital transformation can allow you to react more easily to potential problems by providing dynamic data sets that use automation to generate powerful insights into your situation.
Here are a few essential features you should look for when choosing a supply chain management solution.
- AI capabilities: Advanced technologies like artificial intelligence and machine learning allow SCM programs to aggregate and analyze data from all parts of your supply chain, providing powerful insights that can inform your business decision-making.
- Real-time visibility: Real-time updates and collaboration functionality can show you when and where problems are appearing in your supply chain.
- Scalability: Choosing a scalable cloud-based SCM solution allows you to account for your company’s current and future needs as your situation changes.
2. Choose Reliable Suppliers
You need to work with suppliers you know you can count on in any situation. Supplier inefficiencies adversely affect lead times. If you’re working with an unreliable company, you may struggle to meet deadlines, which can harm the customer experience — and your company’s reputation.
Consider the following questions:
- Does your supplier promptly respond to your messages?
- Do they update you on changes to give you enough time to react?
- How often have you received incorrect orders, if at all?
- If errors occur, how does your supplier respond?
If you’re already in business relationships with unreliable partners, it may be time to look for new ones. Make sure to choose suppliers with reliable lead times and maintain consistent communication to keep everyone informed and hold everyone accountable.
3. Increase E2E Visibility
End-to-end visibility is critical for modern manufacturing companies. Optimization within functional silos may have worked well in the past, but in the current logistics landscape, companies need to focus more on the big picture.
You need to easily obtain and assess data on every piece of your supply chain, from sales to delivery. Here are some steps you can take to improve your company’s E2E visibility.
- Break down silos: One way to eliminate silos is to incentivize and facilitate information flow and collaboration between pieces of your chain.
- Implement integrated tech solutions: Supply chain management software programs that integrate with third-party apps allow you to consolidate all your supply chain data in one centralized location, facilitating seamless information flow and in-depth business analyses.
- Adjust your operating model: Consider making changes that will minimize costs and reduce lead times, like switching to closer distribution centers in more advantageous locations or working with domestic suppliers.
4. Use S&OE and S&OP
The supply chain management principles called sales and operations execution and sales and operations planning are powerful ways to proactively strengthen your supply chain and your response to disruptions.
These principles are as follows.
- S&OP: S&OP allows decision-makers to gain valuable insights up to 18 months in the future. Manufacturers can use this window to evaluate their overall supply chain situation, which is crucial information for setting long-term supply chain goals that will optimize operational costs and profitability.
- S&OE: S&OE supplements S&OP by detecting potential short-term bottlenecks and breakdowns that could occur up to three months in advance. These insights allow supply chain managers to quickly course-correct, leading to better long-term strategies.
Combining both S&OE and S&OP improves your company’s ability to effectively plan and organize your supply chain strategies monthly, weekly and even daily. This degree of micro-agility significantly increases your supply chain’s resilience to unexpected disruptions.
5. Reshore Manufacturing Operations
While domestic supply chains can suffer disruptions like international ones, bringing manufacturing back to the U.S. can increase supply chain resilience and forge stronger connections between steps in the value chain. For the same reasons, reshoring can also benefit Canadian companies.
Consider these advantages of reshoring manufacturing.
- Shorter lead times: Domestically produced products spend significantly less time in transit. Additionally, working with suppliers and retailers within your time zone means you can communicate in real time — without having to wait long periods for answers to your questions, you can address problems as they arise, ensuring you’ll deliver products to customers on time.
- Reduced costs: U.S. companies reshoring their manufacturing operations can expect to pay less for shipping and production, since products will take less time to product and transport. Additionally, switching to domestic suppliers could reduce raw material costs for some industries.
- Increased supply chain control: Rather than allowing overseas suppliers to set the rules, manufacturing companies that reshore their operations can be more selective in choosing which vendors to work with.
High E2E visibility is critical for a successful reshoring strategy in today’s logistics environment because it enables your decision-makers to identify and respond to potential supply chain disruptions before they become problems. Increasing the information flow between business partners allows business leaders to respond dynamically and plan for similar situations in the future.
6. Nearshore Manufacturing Operations
Sometimes outsourcing is the most cost-effective option — however, bringing them closer to your headquarters can still be financially advantageous.
Nearshoring involves relocating outsourced processes to nearby countries. For example, an American company that manufactures products in China may wish to move these operations somewhere closer, like Mexico or Canada.
Like reshoring, nearshoring improves supply chain resilience by increasing your E2E visibility and reducing your shipping costs.
Optimize Your Supply Chain Improvement Strategy With Purolator International
Trustworthy business partners are critical pieces in the manufacturing supply chain. At Purolator International, we strive to be the best logistics partner for U.S.-based manufacturing businesses that ship to, from and within Canada. When you work with us, you get access to our extensive logistics network, facilitating all your mission-critical shipments.