When it comes to a supply chain, there are no hard and fast rules. It varies depending on the size and complexity of the business. At its simplest, it's about getting raw materials from a supplier to a manufacturer, and then getting products out to customers.
Yet, even for small businesses, this seemingly simple task has complex underpinnings. Why? Because it relies on a carefully choreographed dance between internal business functions and any external services in the supply-chain.
Let's take a look under the hood:
So, at any point in time, your production team may need to talk to a parts supplier about a new widget; and the sales team may need to talk to the transport company about a new freight route; and the end customer may need the reassurance that their precious purchase is on its way.
Supply chain management and logistics, then, is the process of ensuring that all of the different components speak the same language, and are working towards the same goal. It's not just about moving goods – it's the management of physical materials, services, information, money and time across and between organisations.
The objective is to make each link in the chain more efficient and less costly.
For SMBs with online stores, two key components are warehousing and shipping – which are both integral to the pick-and-pack fulfilment service. That is, getting the products off the warehouse shelf and on the road to the customer. Inventory management then becomes important, to track whether stocks are depleting and plan future production.
It can get messy, and it's worth the up-front investment in strategies and services to make your supply chain as neat and efficient as possible.
This depends on how complex your supply chain is. Upfront, you may face significant IT costs, such as automation and tracking technologies; ongoing, there are resourcing and capital costs involved.
In evaluating the cost to your business, you can pin a 'per item' or 'per shipment' cost to the movement of goods. This gives you a starting point to measure potential savings against.
For SMBs, outsourced (or 3PL) logistics often makes more sense. 3PL delivers tangible cost savings, and also removes the burden of managing supply chain in-house. In fact, the integrated logistics sector is forecast to grow at a compound annual rate of 3.1% through to 2020, faster than GDP – a sure sign that more companies are realising the cost benefits of outsourcing.1
There are four key elements of a well-oiled supply chain:
You can also take a more holistic view of supply chain efficiency, and make improvements at strategic, tactical and operational levels:
Supply chain and logistics providers have the expertise and resources to help you answer many of the issues above.
These StarTrack services might also interest you.
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