How to improve supply chain management
Table of Contents
When running your own business, you’re probably always looking for ways to increase efficiency and boost your profits. One of the best places to look for improvements is in your supply chain. In other words, you want to make sure everything runs as smoothly as possible, from sourcing materials to selling your product to a customer.
This guide will help you improve your supply chain management by covering the following:
- The meaning of supply chain management
- How to improve your supply chain management
- How Countingup helps you improve efficiency
The meaning of supply chain management
Supply chain management is how you manage the flow of goods or services for your business, including all processes that turn raw materials into final products. Your supply chain management involves actively looking for ways to streamline your company’s supply side.
The more efficient your supply chain is, the more value you’ll be able to provide to your customers. As a result, you can set yourself apart from other businesses in your field and gain a competitive advantage.
Supply chains cover everything from how you develop and store your products to what systems you need to manage these procedures.
How to improve your supply chain management
There are many ways you can improve your supply chain management, and how you go about it sometimes depends on the type of business you’re running. But we’ve gathered some tips that any business can start doing today to improve their supply chain management.
- Make your supply chain strategy part of your business strategy
A great way to improve your supply chain strategy is to implement it into your overall business plan. Including your supply chain management as a key focus for running your business effectively will help you boost its efficiency. After all, a good supply chain should align with your business goals and objectives.
When creating your strategy, look into your potential suppliers to make sure they’re a good fit. You also want to create a plan for how to track supply chain performance (we’ll get to that later) and develop strategies for risk management.
Take the time to plan your strategy thoroughly. It’ll help you achieve your business goals more easily.
- Nurture relationships with good suppliers
The strength of your suppliers is a key part of how well your supply chain runs. Look for clients that share your values, source good quality materials for reasonable prices, deliver on time, and have good customer service.
A way to find good suppliers is to work with industry-specific trade associations and professional publications. This will help you come into contact with suppliers who care about the same things you do and who will meet your business needs. Have a browse online to find well-reviewed suppliers in your industry and area.
Once you find good suppliers, hold onto them and nurture that relationship. A key part of maintaining a good relationship with suppliers is continually assessing how effective your partnership is. Use specific metrics to measure how effectively you and your supplier work together. Keep reading to learn more about how to measure performance.
- Use key performance indicators to measure performance
Identify key performance indicators (KPIs) to track supply chain effectiveness. Examples of supply chain KPIs might be on-time delivery, product quality, customer satisfaction, and cost of sales (how much it costs to create the products you sell).
Establishing KPIs that you can measure will help you assess how efficient your supply chain is and how you can improve it. Having clear performance indicators will allow you to grow and optimise your supply chain as you go.
You can also show this data to your suppliers to strengthen the business relationship and give you leverage in negotiations. This way, you can help suppliers improve their performance and reduce costs.
- Use customer demand forecasts to increase efficiency
Another way to improve your supply chain management is to plan your supply chain after customer demand. Customer demand forecasts are when you use available data to predict when customers will want to buy more of your product range.
For example, if you know that red candles sell better around Christmas, you can use customer demand forecasts and work with your supply partners to ensure you have enough red candles in stock to meet that demand.
To forecast customer demand, you also need to understand your place in the market. We’ll explain more about how this works in the next section.
- Understand your place in the market
You need to understand where your business fits into the marketplace to manage your supply chain effectively. Look into how your products or services provide value to customers and how many other businesses might be buying the same raw materials as you.
A key part of creating a successful supply chain is to consider how your type of business might affect what suppliers you choose. For example, if you offer low-cost products, you want to choose suppliers that also set low prices. Otherwise, you’ll probably spend more on making the products that you earn from selling them.
On the same note, if your business is hyper-focused on providing excellent customer service, you want to look for suppliers and delivery companies that are also service-oriented. You want everyone in your supply chain to be able to meet customer demands and provide the excellent service you want to offer.
Understanding what place you hold in the market will help you find the right suppliers and systems to keep your supply chain running efficiently end to end.
Use a simple app to manage payments and invoices
As a small business owner, you already have your hands full with running your business and keeping up your supply chain management. Why waste time on tedious financial management tasks as well?
Thousands of business owners use the Countingup app to save time on their financial admin and focus on growing their business. Countingup is the business current account and accounting software in one app. It automates time-consuming bookkeeping admin for self-employed people across the UK.
With automatic expense categorisation, receipt capture tools and cash flow insights, you can confidently keep on top of your business finances and save yourself hours of accounting admin, so you can focus on doing what you do best. Find out more here.
