How do I Make an Effective Supply Chain?

The supply chain is responsible for two things: cutting costs and keeping an organization legal. As such, an effective supply chain boils down to reducing costs while maintaining service and quality. One way effective supply chain organizations increase and maximize supply chain efficiency is through technology and market intelligence. Both allow managers to create a more agile and effective supply chain.

Market intelligence, for supply chain managers, is more than finding the best shipping routes and practices. It's about leveraging resources and industry relationships to find the lowest cost solution that can be tailored to fit a particular business model. Using internal relationships to benchmark also ensures more relevant and accurate data than obtaining data from generalized industry reports.

A more practical use of market intelligence is gaining information about consumer demand. Higher demand increases the amount of inventory an organization needs. Being able to accurately forecast this demand can help the supply chain to design contracts and vendor relationships to meet this demand.

Companies wanting to create an effective supply chain must figure out the best way to handle both increased demand for the current product offering as well as new demand for new product introductions. Both require a good relationship with the vendor. These relationships allow vendors to understand and meet customer demand effectively.

In addition to reducing costs, the supply chain must also maintain quality and service. Failure to do so can have negative implications from both a net income and legal perspective. One solution supply chain managers have been using is the quality management system (QMS).

A QMS allows an organization to focus on quality one process at a time. It also provides a common language between different functional areas in an organization that may share the same process. A good QMS helps to connect and align company goals to the performance of the supply chain. Examples of QMSs are ISO 9001, Six Sigma, and LEAN.

QMSs work by providing supply chain managers with a framework for mapping out a process to create a more effective supply chain. The process is mapped out from end to end and then studied to uncover bottlenecks and redundant steps. The goal is to reduce errors by concentrating on ways to make each process in the organization more efficient. A team of employees can then recommend changes and implement the changes once approved. Most QMS strive for a more effective supply chain through continuous process improvement.