Supply chain improvement involves making processes more efficient by reducing costs, improving accuracy and speeding up delivery. This requires a thorough evaluation of the process, labor management, and maintaining inventory levels. Managers must analyze the process to identify areas for improvement, interview efficient workers to determine best practices, and evaluate usage histories to set inventory levels.
A supply chain is a series of steps and departments through which an item passes between manufacturing and retail. Supply chain improvement is an activity designed to make the processes and departments involved in the supply chain more efficient. This may include reducing costs, speeding up delivery or improving accuracy. Supply chain improvement suggestions include a thorough evaluation of the process from start to finish; work management; and develop a solid, fact-based strategy for maintaining inventory levels.
Before supply chain improvement can begin, the existing process must be carefully and objectively evaluated. All stages of the process, including production, storage and transport, must be studied, documented and analysed. The work of each employee should be detailed to include administrative duties and plan duties. All automated functions must be evaluated and documented.
Once the entire process is documented from start to finish, it should be analyzed to identify potential areas for improvement. Managers can look for red flags, such as partial truck shipments, out-of-stock, and overtime employee overtime. Once these areas for improvement are identified, managers can develop a plan to address the issues. Improving the problem areas will contribute to the overall improvement of the supply chain.
Labor management is also a critical step for effective supply chain improvement. Production and warehouse workers are an important part of the process. Ensuring they have all the tools, training and experience to do their job can impact the overall success of the supply chain. Best practices can be determined by interviewing the most efficient workers to find out how they do their jobs. These practices can then become policies for other workers to follow.
Maintaining inventory levels is another important part of any supply chain improvement effort. Most manufacturers maintain minimum inventory levels, sometimes called safe levels. These are the levels at which a notice is sent to production to create more goods so that inventory does not run out. If these levels are too low, the manufacturer could run out of stock, leading to costly delays and partial shipments. If levels are too high, goods could be produced long before they are needed, tying up capital in assets that have yet to sell.
Managers can evaluate usage histories to determine if levels are set correctly. They should take into consideration the seasonal highs and lows and may wish to adjust the lows accordingly. Once the minimums are set, they should be frequently reassessed and adjusted if necessary.
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