For today’s manufacturer, success doesn’t happen in a vacuum.
You deserve credit, of course, but so do your global supply chain partners. They’re a key player in the success of any modern manufacturing business.
Here are a few tips for working with your supply chain to cut costs when dealing with your supply chain from the website Supply Chain Mechanic.
1. Quality At The Right Price
Focus on quality at the right price. When searching for supplies, it may be tempting to look at price first. Ignore that temptation, and look instead at quality items offered at a reasonable price. If you focus only on cost, you’re likely to end up buying defective or inferior products.
2. Planning and Forecasting
Concentrate on supply chain forecasting and planning. When you have these skills nailed down, you can be sure you aren’t bringing unnecessary inventory or cost into your business. Instead, you’ll know you’re steering your supply chain onto the right path.
3. Organizational Structure
Create an appropriate organizational structure that includes an efficient purchasing/procurement team. By having that team in place, you can help eliminate any unnecessary spending. It may take time to change your organization’s mindset when it comes to supplies, but having the right strategy will save you money.
4. Rooting Out Waste
How much waste in there in your supply chain? Answering that question – and eliminating the waste you uncover – can ensure your supply chain is more focused on “just in time” supplies or having the just the ideal level of supplies. Among the sources of waste to look for:
- Lag time between production stages.
- Inefficiencies in production.
- Inefficient transportation of products or materials.
- Too much time spent uncovering and correcting production mistakes.
What are the key performance indicators (KPIs) for your supply chain? It’s important to identify these and set them up to help manage your supply chain. They need to be used throughout your organization, so the supply chain is managed by every level of your company.
Some KPIs to look for:
- Total delivered cost – This is a metric that covers operating costs, demand variability, supply variability and inventory.
- Customer service – In a supply chain, the best way to measure customer service is through metrics for on-time delivery or line item fill rate.
- Supply variability – These KPIs measure the status of inventory against adherence to lead times and promise dates. It looks at how well you stick to a schedule, use assets and capacity, as well as item availability.
- Demand variability – This measures inventory, lead times, adherence and improvement to process capability and forecast accuracy and error.
7. Spend Analysis
This might sound obvious, but you need to run a spend analysis. Not every company knows exactly how much they’re spending and where they’re spending it. There’s software available to help you do the analysis, but until you’ve completed it, you won’t be able to determine what you’re buying and begin to spend money.
8. Give Your Suppliers Benchmarks
Set up benchmarks for your suppliers. It’s tempting to assume that because they’ve been your supplier for a long time they’ve always given you quality goods at the cost you want. By benchmarking them, you can find weaknesses in the supply chain, and potentially find new suppliers if necessary.
We realize that changing suppliers can be painful –especially if you have a long relationship with the company – but it may be necessary to secure better service at a lower cost.
At Mars International, we extend our global supply network straight to our customers’ doors, so that they get their products to market in a way that’s fast, reliable and cost-efficient. We help our clients minimize their risk and management overhead because of the processes we’ve set up and the relationships we’ve built.
Contact us today to learn more about how we can help you manage your supply chain.