By the Dictionary: The Definition of Supply Chain Management

Supply chain management by definition involves the entire supply chain, from the supplier out to the manufacturer, followed by the use of the retailer and then the final customer. In order to be efficient in supply chain management, you must meet three primary goals involving levels of inventory, speed of the transaction, and efficiency in sales. We’ll look at how you can achieve success in each of these areas separately.

Reduction of Inventory

While it is necessary to keep a certain amount of product on hand to satisfy the needs of customers, both commercial and consumer, you need to maintain a balanced view of how much is too much. If you have a lot of extra bulk in your inventory, you run several risks. First of all, it cuts into your net worth, showing as excess stock that is not moving. Also, large quantities of stock mean that some of it could become outdated or even expire, if any of it is perishable. Keeping the minimum amount of stock necessary increases your bottom line and reduces waste. It also allows you to provide a greater number of products and respond more quickly, aiding in meeting the next goal of good supply chain management.

Speed of Transaction

In supply chain management, you must be concerned with response time to all customers within the chain. Keeping a smaller amount of inventory will allow you the ability to more carefully monitor the stock, providing you with the ability to more quickly search and find what is needed for a customer. This enables you to exchange data with each customer along the line in real time, getting them the answers they need immediately. Another way to assure that you can respond quickly to requests is to use an inventory management system that helps you keep a tight watch on the coming and going of items in your warehouse. You can quickly index the answers required straight from the system and guarantee that you are providing the customer with the proper feedback. Once you can get the information to the customer with ease, you should consider what they need in return, bringing us to the final goal of effective supply chain management.

Sales Efficiency

The best way to assure that you can make the most of every sale with each customer or client in your supply chain is to effectively meet the needs of these customers. After you provide them with quick, accurate information, listen to what they require and find a way to implement changes that make your speedy response and tightly controlled inventory more efficient for their needs. Perhaps there is a specific product they need to order in certain quantities on a regular basis; in this case, you can ease their concerns by setting up automatic shipments of such items.

Most importantly, in depth knowledge of your inventory and the needs of your customers will help you in implementing effective supply chain management. The key to success is catering to the needs of all sources along the way, including yourself.

Familiarizing Yourself With Supply Chain Logistics

Whereas supply chain management is concerned with the effectiveness of supplying product to customers down the line from the original production, supply chain logistics starts much sooner in the process. In order to be effective in managing your supply chain, you may want to familiarize yourself with the aspects of supply chain logistics as well.

Logistics management involves the planning and implementation of a marketing scheme, as well as the flow and storage of goods throughout the entire supplier process. Sourcing and procurement are part of the logistics process, meaning that you must determine from where the inventory and supplies you intend to provide to others are going to come to you. The logistics management process also include the planning and scheduling of any orders, deliveries, shipping, and other transportation needs of the supplies along the chain. Let’s break it down from the beginning.

• Source – Once a source of goods is determined, you must secure a relationship with this supplier. For your part, this usually means being set up as some sort of distributor or representative that will act as a go-between from the source to the next step in the supply chain.
• Fleet – You will need to set up transportation needs for shipment of the goods that you intend to manage within your inventory. This could be provided from several directions. The source may have a means of shipment, your company may have an in-house transportation department, or you could outsource this work to a transportation or delivery company.
• Warehousing – Once you have the goods, supply chain logistics management requires that you have somewhere to put it. This means having sufficient warehouse space and an organized inventory system into which items can be placed. An inventory management software system and proper labeling and bin placement are vital to controlling the flow of the supply chain.
• Order Fulfillment – In order to complete this aspect of supply chain logistics, there are several requirements to keep in mind. You must have a strategy for taking orders, a process by which these orders are pulled and properly packaged for shipment, a plan for delivery, and a means of tracking the outgoing product so that you can replenish stock as necessary.
• Coordination – All aspects of the supply chain logistics process must integrate seamlessly, meaning that you must carefully coordinate the processes to make the flow of supplies from one area to the next efficient and smooth. Without careful planning, it is quite easy for one aspect of the chain to fail and several customers to be disappointed.
• Customer Service – This is probably the most important part of supply chain logistics, as it affects every step along the way. Regardless of the stage of the transaction or supply process, every customer that is dealt with wants to receive assistance in the fastest, most efficient way possible, with a willing and smiling individual helping them through their part of the transaction. No matter who you are working with, be certain to provide a pleasant front and always strive to achieve the goals of the customer.

Choosing An Effective Inventory Management Strategy

If you plan to be successful as a manager of any department, warehouse, or supply chain, you’ll need to employ an effective inventory management strategy. The most successful retail, warehouse, and supply chain managers are those that are fully aware of the state of their stocked inventory at any time and have a regulated system that allows them to easily index and monitor the coming and going of product within that inventory.

What Are Your Needs?

Implementing an inventory management strategy begins with the specific items that you have and the type of storage location in which the product is kept. For example, your strategy may involve careful planning for spatial needs, especially if you must maintain a number of items in a minimal amount of space. An appropriate strategy at this point would be to create a diagram of your warehousing or storage environment and map out the locations of stocked items that will best organize the materials with no wasted space. This can be accomplished with electronic tools or simply by hand, but it is vital to the success of tracking and managing your inventory.

Maximize Profit

The next order of business when you are mapping out your strategy is to maximize your profit. Many times, the items in your inventory may sit for long periods of time due to lack of demand. This is not only a wasted expense; it also takes up valuable room in your warehouse or supply room that could be filled with a faster selling item which would draw more profit. Your inventory management strategy should definitely include some form of tracking system to identify quick selling products, as well as those with the highest profit margin. Such systems will report what items you should maintain at high levels within your inventory to meet demand and maximize your profit.

Software Systems

Your inventory management strategy would be incomplete without a software system that allows you to keep track of every item that comes in and out of your warehouse. This means that, when inventory checks are completed, you’ll be able to identify errors, thefts, losses, and any other discrepancies much more readily. It will also assist you in your ordering process, since the electronic tracking will give you information on exact quantities of inventory without you having to run out and count everything by hand. When you see that the stock of a particular item is low, you can prepare to reorder.

Labeling and Identification

One final implementation of an effective inventory management strategy is to make sure that all items are properly labeled. Incorrect or incomplete labeling can lead to several problems, including wrong identification by your software, misplacement when restocking the inventory, loss of the item, or inability to find it for shipment or shelving later.

Following these guidelines will help tremendously as you prepare your inventory management strategy and train your employees to adhere to the regulations you set forth. Best of all, set a good example yourself in sticking to the rules, and others will follow your lead without question.

Employing Effective Inventory Management In Your Workplace

To employ effective inventory management in your workplace, you must start at the bottom and work your way up the ladder of techniques. The first thing to consider is how other employees who are involved in the stock and supply within the warehouse are currently handling the inventory for which you are now responsible.

Lack of knowledge on the part of employees is one major distraction when you are attempting to create effective inventory management systems within your department or supply house. There could be several problems to address in this circumstance. First of all, the prior manager may not have employed any kind of effective inventory management strategy, or perhaps if the individual did, there was simply no system passed on to the employees that was to be followed. Either way, you are in a position in which you must determine the next course of action. Most of the time, this will involve training the employees in effective inventory management techniques, including proper labeling and stocking of product, tracking system usage, and ordering strategies.

Identifying the Problem

Another problem may be that there is no current effective inventory management system in place. This leaves the responsibility to you to create such a system. You should start by identifying the existing problems with inventory management and addressing these. Is the stocking system organized, or is everything haphazardly thrown into the first open spot? Is stock being rotated, or is there old product sitting around wasting that is going to become a monetary issue when it has to be thrown out? Is everything labeled in a concise, legible manner so that all items can be located easily? All of these are aspects of effective inventory management that may not have been previously considered and should be worked into your new strategy.

Reorganizing

You may also need to go through the records of stock that has come and gone in recent months to determine if there are items in demand that are not being supported as necessary, as well as if there are things in the inventory that do not move well and could be eliminated or at least slowed in restocking efforts. Determining what products pull in the greatest revenue and have the greatest turnaround is a great way to employ effective inventory management strategies, allowing you to make room for “best sellers” while slowly removing items that don’t sell well.

When you have your cash cows determined, complete a system of stocking and product rotation that keeps items new and fresh, and train your employees to follow the system you’ve created, you’ll find effective inventory management simply becomes part of the daily grind and is no longer something you have to mull over every day. Your inventory checks will be concise and clear, with everything coming together appropriately, and your entire business will run more smoothly without snags. Using methods and techniques that have proven themselves in other businesses where inventory management is essential will make effective inventory management in your situation less of a problem.