Control your Supply Chain PROFIT

August 26, 2020

Supply Chain operations has always been a “necessary evil” within the confines of the business world.  While sales dominate most discussions in the business world (unless there is a problem with the supply chain), making sure that you maintain your Supply Chain PROFIT will allow you to increase your company profits by way of improving the customer experience.

Supply Chain Profit

PROFIT:

  • Performance
  • Returns
  • Organization
  • Fulfillment
  • Inventory Control
  • Technology

The ability to manage and control these 6 items within your supply chain will not only provide better customer service but also improve your spend within the supply chain.

Performance (Metrics)

We have all heard about performance metrics and how they can improve your operations.  

Measuring the metrics of your vendors, factories, carriers and 3PL facilities are critical in today and gives you an advantage when it comes time to negotiate contracts.  The performance of all of these business partners in the supply chain directly affects your customers image of your company.  

Returns

This has always been a big problem for companies since the start of E-commerce operations.  While moving the goods from your distribution facility to the customer is fairly simple, getting it back, credited to the customer and return to stock has been most companies achilles heel.   Finding ways to steamline the process in order to provide a refund to the customer which will allow them to purchase something else from you.  The second part is auditing the return quickly to get it back into inventory to sell.  This is sales dollars that are sitting in the warehouse and not able to be seen by your customers.  Processing these returns back into inventory in order to sell it to the next customer before you have to go into a markdown situation is critical.

Organization

This refers to both the HR aspect and the physical aspect of your supply chain.  

HR aspect:  This goes back to the Performance Metrics that I spoke about before.  You need to have KPIs put in place in order to understand how each employee within your supply chain is performing.  Utilizing that data in order to coach, counsel, retrain or possibly let go helps you build a better operation.

Physical aspect:  Your supply chain operation needs to be organized both physically and with written Standard Operating Procedures (SOPs).  The physical operations (warehouse, distribution) need to be organized and clean as this prevents accidents which could shut down your operation.  This also promotes an attitude within the facility to keep things clean and organized which translates into improved Inventory control and the following of written  SOPs.

SOPs are a living and breathing document within your organization.  Your SOP document should be accessible to all employees in order to know and understand what they are to do within the organization as they back up their job description. The SOPs are constantly updated when changes in process, procedures and policy happen.  

Fulfillment

When looking at fulfillment you are looking for speed and accuracy.  This is achieved by utilizing performance metrics, building a solid SOP, the utilization of technology and reviewing your warehouse design.  All of these will allow you to improve your picking speed and accuracy in your facility to eliminate mis-picks and extra time to get an order from the ordered to being out the door.

Inventory Control

This item in my opinion is a close second to the Returns as being an Achilles heel in a distribution operation.  Making sure you have solid inventory control procedures is a key part of being able to have synergy between your inventory online and inventory in the warehouse.  Creation of cycle count procedures, SOPs that detail the correct way to receive goods into the building, the hand off process across departments, and the correct way to put away of the goods will cover the majority of the issues within Inventory Control. 

Technology

The utilization of technology in picking, warehouse management, inventory control and carrier tracking to your customer gives the transparency to your customer that they are looking for.  Customer’s want to know where their order is in the process and being able to utilize technology to provide them to them today is important.

While the supply chain is a puzzle that is never solved, taking the above six items to review in your operation will help you to maintain a more positive customer experience.

You have a lot of competition in today’s market, making sure that you give your customer the most favorable experience is what will be the differentiator when it comes to future sales.

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