6 Supply Chain Best Practices for 2024 Growth

Effective supply chain management is essential for your company's success. With the rapidly evolving landscape driven by technological advancements, changing consumer expectations, and global challenges, leaders need to make sure that your supply chain is robust, efficient, and adaptable. Here are the six supply chain best practices so you can plan for tomorrow, take action today, and build long-term success.

1. Invest in Cybersecurity

The increasing digitization of supply chains has opened up numerous opportunities for efficiency and innovation, but it also comes with significant risks. Cyber threats are becoming more sophisticated, and a breach can have devastating consequences, from financial losses to damage to your brand reputation. 

Average total cost of a supply chain compromise was estimated to be $4.45 million per breach. The concern continues as the 2023 report notes that business partner supply chain compromises cost 11.8% more and take 12.8% longer to identify and contain than other breach types.

Start with understanding the potential vulnerabilities within your supply chain. 

Multiple suppliers, manufacturers, 3PLs, and IT software providers introduce significant complexity to supply chain operations. Network vulnerability increases with each additional partner. As supply chain networks are interconnected, disruptions in one area (ex: cyberattacks on suppliers) can cascade across the entire network, potentially causing production halts, delivery delays, and financial losses. Supply chain oversight becomes increasingly complex as more entities join the network, making it harder to maintain continuous control.

Consider cybersecurity measures, such as encryption, multi-factor authentication, and regular security audits, to safeguard sensitive information about your supply chain management and operations. You should also train your teams on cybersecurity best practices for supply chain management and have an incident response plan in place for risk mitigation.

When you prioritize cybersecurity, you not only protect your business from supply chain risks but also build trust with your partners and customers.

2. Pay Attention to the Total Cost of Ownership (TCO)

A common mistake businesses make is focusing solely on the initial costs of products and services, neglecting the broader picture of your supply chain processes. The Total Cost of Ownership (TCO) includes all direct and indirect costs that come with acquiring, operating, and maintaining a product or service over its entire lifecycle. Supply chain leaders need to pay close attention to TCO if they want to build an efficient supply chain.

To effectively manage TCO, you need to regularly evaluate your supply chain processes using Key Performance Indicators (KPIs). These KPIs might include lead times, order accuracy, inventory turnover, and transportation costs. Regularly monitoring these metrics allows you to identify inefficiencies, supply chain disruptions, and areas for improvement.

Paying attention to the Total Cost of Ownership also allows you to consider the long-term implications of your supply chain decisions and chain management. Opting for a slightly more expensive supplier with superior reliability and service levels might reduce costs related to delays, quality issues, and customer dissatisfaction. This can reduce the TCO in the long run.

By focusing on TCO, supply chain leaders can ensure that your supply chain is cost-effective and resilient. It can also help you develop supply chain management strategies that benefit the cost of your operations in the long run.

3. Focus on Talent Development

As your supply chain operations become more complex, your demand for skilled professionals who can help you navigate these challenges grows. Investing in talent development is essential for building a high-performing supply chain team capable of driving innovation and efficiency. It's important to help your supply chain managers grow and develop. Working with a growth consultant to improve your supply chain process is also a part of successful supply chain management.

Refresh your development content to cater to new ways of learning, especially in the increasingly virtual landscape. This includes leveraging e-learning platforms, virtual simulations, and interactive workshops. Avoid corporate jargon and technical language. Instead, use clear and relatable examples to make training more effective and engaging.

Staying current with the latest tools and technologies is crucial. For instance, APICS, now known as the Association for Supply Chain Management (ASCM), refreshes their supply chain content every four years to ensure it reflects the latest industry trends and practices. Encouraging your team to pursue such certifications and continuous education will keep your supply chain knowledge up-to-date and relevant to minimize supply chain disruptions.

4. Foster Strong Supplier Relationships

Building and maintaining strong supplier relationships allows supply chain managers and leaders to improve reliability and innovation. Collaborative partnerships with suppliers can lead to more consistent quality of raw materials, timely deliveries, and even cost savings.

Strong relationships also open the door to industry-leading insights and innovative practices. For example, partnering with suppliers who are implementing sustainable practices or utilizing new technologies can give you a competitive edge. Regular communication, joint problem-solving, and mutual trust are key components of successful supplier relationships.

Additionally, identifying and mitigating risks becomes more manageable when you have reliable suppliers. When you work closely with them, you can anticipate potential disruptions and develop contingency plans. This helps make sure that your supply chain remains resilient under various scenarios.

5. Embrace Digital Tools

Incorporating advanced technologies into your supply chain can significantly enhance efficiency, visibility, and responsiveness. Digital tools such as Artificial Intelligence (AI) and automation can transform the entire process of your supply chain management and make it more consistent, resilient, and effective.

When supply chain management involves and embraces digital tools, leaders gain more visibility and transparency. Advanced tracking systems allow you to monitor the movement of goods in real-time, providing insights into inventory levels, shipment statuses, and potential bottlenecks. Over time, you'll also be able to see supply chain trends more clearly. Supply chain visibility helps you make informed decisions and respond faster if there's a supply chain disruption.

Automating repetitive tasks can also lead to substantial improvements in efficiency and accuracy. Processes such as order processing, inventory management, and demand forecasting can be streamlined through automation. This reduces human error and frees up your team to focus on more strategic activities in your leadership journey.

6. Prioritize Customer Experience

Customer expectations are higher than ever, and meeting these demands is essential for maintaining a competitive edge. A customer-centric approach to supply chain management focuses on delivering products accurately, on time, and in the desired condition.

Demand management plays a critical role in this process. When your forecast accurately predicts customer needs, you can avoid having too much or not enough product in stock. This ensures that you have the right products available when and where they are needed. Using advanced analytics and machine learning can improve your supply chain's ability to forecast accurately and stay ahead of market trends.

Most importantly, continuous improvement should be a core principle of your supply chain strategy. Regularly reviewing and refining your processes based on customer feedback and performance data ensures that you consistently meet and exceed customer expectations.

FAQs

What is the best practice in SCM?

Investing in cybersecurity, paying attention to the Total Cost of Ownership (TCO), focusing on talent development, fostering strong supplier relationships, embracing digital tools, and prioritizing customer experience are some of the best practices in Supply Chain Management (SCM). By integrating these practices, companies can build a more resilient, efficient, and customer-focused supply chain.

How can leaders adopt supply chain best practices?

Leaders can adopt supply chain best practices by first doing an in-depth assessment of their current supply chain operations to identify strengths and weaknesses. They should then prioritize areas for improvement based on their findings. It's important to invest in training and development for your teams to make sure that they are equipped with the latest skills and knowledge. Additionally, leaders should leverage technology to enhance visibility and efficiency, foster collaborative relationships with suppliers, and continuously monitor and evaluate performance using relevant KPIs.

Should supply chain leaders hire a growth consultant?

Hiring a growth consultant can be highly beneficial for supply chain leaders, especially when navigating complex challenges or aiming for significant improvements. Growth consultants bring specialized expertise and an external perspective that can help identify inefficiencies, implement best practices, and develop strategic plans for scaling operations. They can also provide guidance on adopting new technologies, optimizing processes, and improving overall supply chain performance.

Maximize the Efficiency of Your Supply Chain Management with Solvers Collective

Implementing the supply chain best practices discussed in this article can significantly enhance the efficiency, resilience, and growth potential of your entire supply chain management process. By investing in cybersecurity, focusing on TCO, developing talent, fostering supplier relationships, embracing digital tools, and prioritizing customer experience, you position your business for success.

If you want to optimize your supply chain management, Solvers Collective offers tailored solutions to transform your operations from working to outperforming.

Learn more about our strategy development, process improvement, and risk management services.