Ah, America, Land of Opportunity” a place where someone like you and I can have a great idea, write out a business plan, and begin the exciting process of starting a business. There’s a lot that goes into running and maintaining a business, small or large. To garner a successful outcome, you must understand the ins and outs of what it takes and what’s involved in taking on this exciting new endeavor. One important aspect of running a business is achieving a supply chain that works for you.
You might be wondering what a supply chain is, and why it is so important. A supply chain is a system of transferring raw goods or materials from one company to another for further production and distribution. Management over such a system is crucial for efficiency and the ever-changing ebb and flow of the statistics of supply and demand.
Every company is different in what their needs for a supply chain system will be. Mistakes have been made in the past with major companies, and others have been more successful. Together, we can find out what may or may not work best for you as you consider different aspects of supply chain management and how it will affect your business.
Avoiding Getting Schooled on Supply Chains
Taking on the management of a supply chain is no easy task. Giants have fallen due to the mishandling of responsibility, and others have made companies flourish. An example of mismanagement concerning the oversight of supply chains is Popeyes. Don’t let the fact that I didn’t have the chance to try one of their infamous chicken sandwiches before they ran out of them make you think I am bitter. I am bitter, but that’s beside the point.
According to ‘Mashed,’ Popeyes is working tirelessly with its suppliers to produce more for an ever-growing community hungry for spicy chicken sandwiches.
Sometimes these instances can stoke the fires of consumer enthusiasm. Other times, however, something like this can be very damaging to a company’s reputation. It’s a subject of stinging resentment toward many businesses, including large pillars of the economy. For example, Apple failing to produce AirPods and iPhone Xs, or Microsoft failing to produce wireless controllers for the virtual reality company, Oculus. A blunder like this for larger companies means a slight drop in stocks, but for smaller businesses, it could mean much, much worse.
Related Article: How Continuous Improvement Could Change Your Business
The Supply Chain Process
A supply chain can be established in many ways, involving many steps in the process, or very few. You can get in contact with a certain company that will provide completed products, or you can have the material shipped that you will then complete upon its arrival to your business.
Here’s an example: Boeing is a huge company that oversees a variety of shipments from its supply chain. It has a lot of moving parts in its system. Boeing can use companies that create parts for airplanes. The companies can use a place like Service Steel Aerospace to cut raw steel materials to fit the sizes and types of metal needed for a specific piece to fill Boeing’s order. Service Steel Aerospace can then employ a metal manufacturing plant so that it could get its hands on raw, freshly-treated materials that it can cut to fill the orders for the other companies.
Do you see the process? The suppliers that aren’t suited to fill the immediate needs of the business or company in question will then need to employ the services of others that can. This is something that demands oversight, but in the end, it can move swiftly and be successful.
This process will vary with items like toys or tools, which can take several steps to accomplish before they reach their final destination. Food and other consumables, however, can take less time going through the supply chain process, given the simplicity of materials like meats, vegetables, or fruits.
According to eetimes.com, there are four stages of building an effective supply chain:
- Supply management: This is the basic communication between the initial company and the first stop in its supply chain. Using the example above, this would be like Boeing talking to a machinist company.
- Supply Chain Management: Think of the term “extended supply chain”. This would denote the act of delving deep into the different tiers beyond the initial company you deal with on a regular basis. If an airplane crashes, Boeing can track down the piece of metal that came from the plant that it was smelted in. This speaks volumes on the organization and management of Boeing’s supply chain system.
- Supply Chain Integration: The ability to strategize and collaborate with each of your suppliers so that your product arrives logistically sound regarding the quality and quantity of your needs is an upscaling of communication at its core.
Demand-Supply Network Collaboration: Boeing knows what it needs, plain and simple. Information that Boeing deems necessary to achieve desired outcomes is going to be trickled down the line so that there is no question or second-guessing. A company like that cannot afford to be liberal with information when it comes to the exactness of the product they desire.
Like I said before, if one seemingly insignificant part of the plane is the wrong type of steel, the wrong heat, even slightly outside of tolerance, or warped in some way, it can cost hundreds of lives.
Do not spare vital information to your supply chain. If it’s not up to your standards because of lack of communication, it can mean devastating repercussions down the line, wasted time and money, or a blow to your reputation as a company.
Don’t Be Chained to Any One Approach
According to boxaroundtheworld.com, there are six different models for you to follow as to how you would want to go about choosing the supply chain that’s right for you:
Continuous Flow: Think mass production; companies that mass-produce a certain item will have similar specs to draw from until further notice. The number of items being shipped may differ, but the object in itself will remain the constant factor.
The Fast Chain: When I think of this, I think of fidget spinners. These toys were a trend, a hot trend, but they were a new toy on the market. This meant that manufacturers needed to adapt in order to produce them, and quickly. These are the types of manufacturers that are essential for getting new things out and in a hurry.
The Efficient Chain: If you want to produce something better than another business or company to give you an edge, then this is the model for you. For example, if your business deals primarily with food, then searching locally for the freshest, most flavorful foods, abundant in size and color would be a smart way to go. Choosing this over a company that is lacking in those things would be in your best interest. Even though the price may be higher, it is a risk that could pay off greatly if it makes you stand out.
The Custom Configured Model: If you have an object that will warrant the employment of a certain manufacturer that produces a certain object, but you have put a certain spin on it that makes you unique, then this is the type of model for you to follow. This may require a few more steps for you to add to your supply chain than a basic continuous flow model.
The Agile Model: McRib season is here. McDonald’s has the manufacturers to bring in tons of McRibs at a moment’s notice, but this would be considered a specialty order. Once this order is called upon, the manufacturers would be expected to produce these items quickly and at the highest standard.
The Flexible Model: Let’s say your business thrives in one season but drops off in another. Maybe you’re in construction, and you need windows. Construction will flourish during spring and summer but will taper off in the fall and winter. Window companies are generally set up to withstand the ebb and flow of the supply and demand of the construction world. They can be at a standstill at one moment but can pick up the pace and produce thousands if needed.
Overall, the effectiveness of your supply chain depends much on you. How involved are you willing to be when it comes to your manufactured goods or items? How much information are you willing to share to get exactly what you need? Have you done the math to figure out your supply and demand? Are you communicative to your suppliers so they aren’t left out of the loop? By taking in these aspects of supply chains, you, too, can help take your business to the next level and look forward to a successful future.