Just over a month ago many of us pledged to be different. With the excitement of the festive period a fading memory, the reality is that most of us have very quickly slipped back into the day-to-day routine and focussing on making it through the week.
Below are my top 5 supply chain resolutions… It’s only February… You’ve got time to make a couple more.
1. Know Your Worth
Understanding the costs of your supply chain will allow you to make better decisions...period. Whether your aim is to improve customer service, reduce inventory, improve cash flow, grow the bottom line or a combination of these, you HAVE to have a handle on your costs.
Getting under the skin of the logistics, storage, purchasing and production costs incurred at all stages of your supply chain will allow you to streamline your operations and drive cost savings.
A detailed cost-to-serve analysis will give you all the data you need.
2. Focus on Your Core and Trim the Fat
Defining your Core product can be done in various ways. This could be determined by sales volume, overall revenue, profit, key customers…it’s really up to you.
Best practice Pareto classification based on rules which allow you to ‘review your core’ on a period basis are always advisable for the following reasons:
- It’s based on rules and logic that everyone can understand
- Regular review and reclassification of products reduces the risk of outdated stocking policies, overstock and stock outs
A common Pareto classification is ABC (based on Sales Volume), XYZ (based on cost of stock). This dual approach gives us 9 different classification groups:
AX - biggest sales volume, lowest cost
CZ - lowest sales volume, highest cost
AX are your lowest risk products – high volume, stable sales with low cost of product. These are the products you should aim to always have available.
CZ are your highest risk products – low volumes, often volatile of sporadic sales patterns, with a high cost of stock. These items could be managed with vendor owned inventory if you purchase your goods for sale, or with consignment stocks and minimum order quantities if you manufacture your goods. Looking at ways to reduce your liability on these items should be a priority.
The holy grail of having the right stock of the right product is ever elusive… You’ll never get it right 100% of the time, but you can get close if you stay agile, adapt and review your inventory policies.
3. Ditch the Dead Wood
In a similar vein to resolution 2: you have to constantly review and assess your range and product offering if you want to stay in good supply chain shape.
Don’t be afraid of the range reaper… Low sales lead to written off stock and unnecessary storage charges for product you can’t or won’t sell. IF you catch it early, you may be able to work with your supplier to do a stock cleanse so that they can sell that product to other customers.
Ultimately if it’s dead, let it go.
4. Reflect and Assess
We are drowning in data. Over the years, the number of KPIs, reports, and targets can easily get out of hand.
Take a minute, grab a coffee, and take a good look at the information you actually need on a regular basis.
What are you trying to achieve? Where are you targeting growth and change? How do your reports, KPIs and other metrics help you to get there?
Personally, I’m a fan of changing up your reports as you adapt your strategy and projects for the year. Not only will it keep you focussed on the task on hand, but the more you change up your reporting, the harder it is for people to get wise as to how to fudge the numbers or ‘play the game’ (we’ve all experienced this!).
Data and reports should help you to drive, measure and monitor change, adherence (and inherently non-adherence), or act as warnings to major issues.
If your reports aren’t doing this you probably don’t need them.
5. Get Physical
The final resolution 99% of us could stand to make is to step away from the technology and interact with our colleagues.
How many of us can honestly say the best solutions, changes and fondest experiences in our careers can solely from an email chain?
Be less robot and more human… I guarantee you’ll like it!
About the Author: Rachel Sellers is an experienced global commercial planner, and also an Associate Lecturer at the University of Manchester Business School
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