Supply chain can make one of the biggest impacts on your operations and bottom line — positive or negative. Yet it is often overlooked, treated as an afterthought, or viewed as an unchangeable necessity of doing business. In reality, supply chain can be analyzed, optimized and managed just like any other asset to improve its performance and the performance of your business. Supply chain issues — such as interruptions, inadequate inventory management, poor quality and more — can quickly create negative repercussions that span nearly every area of your operations, including:
- Lengthy maintenance processes: If replacement parts are not on hand or are difficult to locate, preventive and predictive maintenance can take longer than needed.
- Extended downtime: If equipment fails and the correct part is unavailable, downtime will last longer than necessary. This is an unacceptable scenario when every minute loses more money.
- Inefficient inventory management: Inadequate supply chain management can mean that too much or too little of a given part is on hand. Too much, and inventory is taking more space than it should. Too little, and repairs and maintenance may take longer.
- Increased sourcing costs: Without a critical, analytical eye on supply chain processes and partners, costs may rise unabated with no plans to reduce them.
- Insufficient planning: When the supply chain is handled as a short-term solution — looking only as far forward as the next order — long-term planning and forecasting will be insufficient or nonexistent. That said, long-term planning is a key to reducing costs.
Benefits of supply chain management
Supply chain management and a supply chain implementation plan can work to counteract these pain points. Benefits of supply chain management implementation include:
- Reduced downtime: Effective supply chain management means that spares and replacement parts are available when needed and where they belong. This reduces time searching for parts and rectifying inventory discrepancies and enables machinery to get back online more quickly.
- More effective, efficient inventory management: Inefficient inventory management can be one of the biggest costs to a facility. By taking control of the supply chain, storeroom management is better able to maintain a “just in time” system based on lean principles — keeping only as much inventory on hand as necessary and vastly streamlining inventory processes.
- Reduced sourcing costs: By examining the supply chain and being prepared to adjust as necessary, you are in a better position to use data to leverage buying power and negotiate more favorable terms.
- More effective long-term planning: Long-term planning further benefits the sourcing process, providing additional data points and information to reduce supply chain costs.
Supply chain implementation plan
SCM implementation (supply chain management implementation) can yield major benefits, but requires effort and buy-in to be effective. In this section, we will look at some of the best tips for how to implement a supply chain management system:
- Gain internal trust and commitment: In most facilities, implementing good supply chain management means that procedures will change. This can be difficult for workers to handle, especially those who are most impacted. Be sure to communicate why these changes are occurring, what the benefits are, and how employees can take ownership of their role in the new management strategy. These steps will give you the best chance for buy-in and a high level of performance for your employees and the strategy.
- Keep a laser focus on data: With the plethora of data technology available, there is no reason not to implement an analytics-based supply chain plan. Data will help you make effective decisions in areas such as MRO procurement, understand where change and optimization are needed, and will assist in planning and ordering — serving to reduce costs through forecasting. Consider entrusting a specialized company such as ATS with your MRO procurement needs.
- Choose the right technology: An effective, data-based supply chain management system must rely on a technology solution to be effective. This solution will help with data, planning and ordering. It will typically be a SaaS (Software as a Service) or an on-premise solution. SaaS will be a lower-maintenance solution that’s right for those wanting something up and running “out of the box.” On-premise, alternatively, may cost less overall but will entail greater IT responsibilities for your organization.
- Treat supply chain relationships as partnerships: All too often, suppliers are viewed as a transactional element in operations. Taking time to develop relationships and partnerships with suppliers can yield major benefits such as enhanced customer service, more favorable terms, planning assistance, etc. On your part, effective supply chain management will make you a better customer — further cementing the partnership.
With an understanding of the pain points and advantages of supply chain management, and tips for plan implementation, you are ready to reap the benefits of an effective supply chain strategy. For further assistance, ATS provides a one-stop-shop for procurement support and other MRO asset management services. We are ready to understand your needs and provide a solution. For more information, contact us here.