There is always a chance of things going wrong. However, a little planning can go a long way in keeping those things from affecting your business. There are some disruptions in the supply chain that can be prevented through effective planning and others that can be managed. This article will explain the importance of planning in supply chain optimization and how to actually go about it.
Supply Chain Management Planning
Supply chain planning is a process of strategizing different operational stages in the supply chain in a way that ensures the smooth flow of all the processes. Supply chain planning accounts for possible delays and disruptions in the supply chain by putting a system in place that will ensure overall efficiency despite a few things going south along the way.
From receiving goods and storing them to taking orders and shipping the goods to customers, each stage of the supply chain requires its own planning. The strategies for each stage can vary from business to business and therefore, the first stage of effective supply chain planning is to know your business well. This includes having the knowledge of the laws that apply to your business, the demand of your products in different areas, the storage requirements of your product, and the expectations of your customers.
For example, if a manufacturer fails to deliver a finished good in time, you can prevent disruption of the supply chain if you already have some extra product in stock but this might not apply to perishable items.
Supply Chain Planning Processes that You Can’t Do Without
There are three main processes that we consider essential for all eCommerce businesses to consider when it comes to supply chain planning. These include production, supply management, and operation planning.
Crucial to production planning is choosing the right manufacturer. The first step in the supply chain is having the finished goods available to you at the right time. When you choose the right manufacturers for your product, you ensure that you will have the right quality of product available at the right time to you.
To avoid customer frustration that is caused by delays in the supply chain processes, it is important to see the production lead time promised by your manufacturer. Production lead time is the time it takes the manufacturer to provide the finished goods to you after you have placed an order. The shorter the production lead time the better.
Some important things to consider to determine whether or not you have the right manufacturer include knowing its key performance indicators and seeing if it is meeting SLAs, showing improvement, and is producing products that meet your quality standard.
Supply management planning
The next process to plan in the supply chain management planning is the supply of finished goods to your customers. The idea is to keep your inventory levels at an optimum level so that you don’t have to face problems that result from not having enough inventory (out-of-stock issues and backorders) or having more inventory than is required (outdated and expired products).
The key to ensuring optimum levels of inventory is demand forecasting. Even though demand forecasting is never 100% accurate, it acts as a guide to managing your inventory levels and is extremely helpful in maintaining an optimum level of inventory.
Operation planning is crucial if you want to maintain a lean supply chain. The idea is to work out the best combination of low costs and efficient delivery. Operation planning has to do with internal logistics and involves decisions about warehouse management and shipping.
You have to take into account the dynamics of your business to see which options regarding these operations will be the most profitable to you. Some businesses prefer to manage all the operations on their own, while others like to outsource them to 3PLs or 3rd party logistics companies to ensure efficiency. You have to see which method will work the best for you by keeping into account things like the size of your business, your budget, and the preferences of your customers.
If you feel like you can manage the rest of the operations yourself but are having problems concerning order fulfillment, you can find a fulfillment company that will take care of that part of the operations for you. You can also rely on 3PL logistics companies like ShipBots to provide you “pack and ship” service as a standalone service or you can hand over multiple operations that form the part of eCommerce fulfillment.
Benefits of Effective Supply Chain Planning
If you think that supply chain management planning is too much of a hassle, this section is for you. The benefits of effective supply chain management planning far outweigh the time and effort that goes into it.
Managing your inventory guided by demand forecast, finding the right manufacturer to reduce production lead time, and maintaining the warehouse operations to prevent damage to the products are all made possible through effective supply chain management planning. While in the short-run planning may seem like a lot of work, in the long run, it reduces your costs by preventing things like expired products, delayed deliveries, and unnecessary expenses.
Clear communication is what comes naturally as a result of proper planning. When you are clear about how you want to run your processes, you know what to say to your team and that ensures a smooth collaboration. Outsourcing some jobs to 3PLs can also help in ensuring smooth collaboration as 3PLs like ShipBots give you access to real-time insights which ensures transparency of processes and creates a better understanding of how things are running.
Effective planning creates a win-win situation for everyone. When you are able to run your operations smoothly you have more time and energy to invest in customer satisfaction and the more customer satisfaction you create the better it is for the growth of your business.
Having a system in place that accounts for possible disruptions ensures that nothing gets out of hand even if there are some ups and downs along the way. Moreover, having a plan enables you to define each operation clearly and allocate the tasks to your team members without ambiguity. This, in turn, leads to better efficiency.
Does It All Sound Too Overwhelming?
Despite the incredible benefits of effective supply chain management planning, the task can still overwhelm new businesses. The good news is, you don’t have to take it all upon yourself. Hiring a reliable third-party logistics company like ShipBots can make order fulfillment hassle-free and ensure the smooth running of your business.
ShipBots tracks your inventory for you and works out the optimum production lead time so you don’t have to encounter issues like stockouts. Moreover, ShipBots ensures efficient delivery by calculating freight transit times and warehouse receiving times. Hiring a 3PL like ShipBots will take the burden off your shoulders without relinquishing your control of the processes. ShipBots provides full visibility into the operations to ensure that the business owners stay in touch with how things are moving and can take the necessary measures to make their business grow.