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September 03, 2015

8 Must-Have Building Blocks for a Robust Supply Chain

Are you building a global network or trying to beef up your existing operations? If so, there are some factors you simply can't ignore when it comes to forging a robust supply chain. Below are the key building blocks that should be on your radar.


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1. Quality

Without a quality system and quality suppliers in place, you will get nowhere. At the very least, you should have a continuous improvement process (like a Plan-Do-Check-Act plan) in place. Without a good quality product, your sales will be non-existent, or they will die as soon as customers realize your quality issues. 

2. Diversity

We've said it before, and we'll say it again: you should not put all your eggs in one basket. Or, more appropriately, in one factory. This holds true for many reasons, including competitive pricing, lead times and overcoming any quality or sourcing issues that arise.  

3. Talent

You need the best people to manage a complex operation. Be stingy when it comes to the price of office supplies, but not when it comes to the cost of a high-caliber team to run the business. You are only as strong as your weakest link. 

4. Processes

Managing a global business takes planning (lots of it). Process flow control diagrams help determine the process and minimize errors. Take a proactive rather than a reactive approach when it comes to perfecting processes. You – and your customers – will be happy you did in the long run.

5. Systems

ERP, MIS, Inventory Management, etc. You need to track the dollars! And the inventory turns. And the accounts receivable. And the freight rate fluctuations. The list goes on and on. The more you can automate and take advantage of a system’s capabilities (and ditch the manual data entry and reporting), the more efficient your team will be, giving them time to focus on bigger-picture issues and opportunities.

6. Contingency Plan

Plan for the "what ifs," because they happen. Supply chains become disrupted. Sometimes disruptions are planned and predictable (Chinese New Year), but most are not (tsunami, Tianjin explosion). Have a contingency plan in place to keep business running as smoothly as possible while the disruption is mitigated. And head back to point #2 – this is when having a diverse network can really pay off.

7. Accurate Forecasting

If you don’t manage your supply, it will manage you and all of your working capital. Be realistic with your forecast so the entire chain is prepared. If your numbers are way off, either you or your supplier will end up holding inventory, and we all know inventory = money! Or you will get stuck funneling your cash into pricey air freight shipments to avoid a line-down or backorder situation. You and your supplier are a team. Work together on the forecast and inventory plan. You’ll be glad you did.

8. Did I mention Talent?

Seriously, smart leaders always seek the wisdom of those who understand the process, be it manufacturing discipline, legal, accounting, business services or freight forwading. Buy a few lunches to ask the right questions and hire the right support team.

What other building blocks do you find essential for a robust supply chain?

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Filed Under: Supply Chain Management