One of the two most effective strategies for improving the supply chain is the adoption of an Enterprise Resource Planning (ERP) software. The other is appropriate training in supply management. The following tips can help you improve your supply chain management with a view to increasing your business’s profitability and reduce your cost of doing business.
1. Automated Purchases
For a company that receives many orders, it’s time-consuming to continually monitor inventory levels. To overcome this headache, purchase an ERP system that features a Supply Chain Management (SCM) function to aid automated purchasing.
The system should be able to automatically monitor supply levels and place orders with vendors should the inventory levels dip below a pre-set level. This leaves employees to handle other important tasks.
A supply chain strategy should have at its core a standardized system. ERP does this by boosting efficiency besides saving money and time. Besides, standardization results in enhanced accuracy and encourages effective teamwork where communication is clear and accurate.
3. Enhanced Transparency
An ERP system eliminates the possibility of mistakes and fraud, both of which are common in unregulated and poorly monitored supply chain systems. It helps in keeping a clean inventory by ensuring that the physical count tallies with the reported system count. This enhanced transparency minimizes or eliminates losses arising from an unexplained inventory.
4. Improved Data Insight
Your supply chain strategy relies on precise and timely information and data. An ERP system provides you with real-time reporting that is based on accurate data and information. Such reports provide actionable insights into the health of your supply chain, which, in turn, aids informed decision making.
5. Real-Time Management of Your Inventory
As mentioned above, having accurate, current, actionable data and information is critical in making informed decisions. This can only happen with a system that provides real-time inventory management such as a modern ERP system. Whatever system you decide to use, make sure it has adequate room for scalability and flexibility to accommodate your expanding business.
6. Monitor the Vendor’s Performance
The ability to monitor the performance of the vendor greatly determines the efficiency of a supply chain system. An ERP software has provision for rating and monitoring the performance of vendors. This helps greatly in isolating any issue a vendor may be experiencing. The resulting data could prove critical during vendor re-negotiations.
7. Enhanced Cost Awareness
Different variables along the supply chain can lead to avoidable extra costs. An ERP system features centralized data that helps eliminate waste and financial loses in the supply chain by streamlining processes and providing clear financial communication.
8. Efficient Management of Returns
Even with the most efficient systems, returns are inevitable. An effective supply chain management should feature an efficient system for managing such returns in a timely and appropriate manner to allow quick re-processing of returned items.
9. Streamlined Accounting Processes
An efficient supply chain system should streamline accounting processes across the supply chain. Such a system should provide integrated functions that allow seamless interactions with all the relevant departments and personnel in the chain. The result is increased efficiency arising from less paperwork and mixup of invoices.
Besides, such a system should be integrated with the appropriate payments infrastructure such as Electronic Funds Transfers (EFT) to enhance efficiency and reduce wait times during payment processing.
10. Take a Supply Chain Management Course
Attending a supply chain management course is the first step to becoming an efficient supply chain manager. Besides having the basic qualification, you need to sharpen your skills and razor-focus your expertise in supply chain management. Such training should be experiential and focus on exposing you to cutting-edge research in supply chain management.
Worldwide, businesses spend trillions of dollars in logistics management. The financial health of any business depends on the efficiency of its supply chain networks. An inefficient supply chain can result in huge losses and seriously damage profitability.