Top 20 Supply Chain Best Practices in 2024 with Case Studies

Shehmir Javaid

Supply Chain & Logistics

Updated on Mar 25

6 min read

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Top 20 Supply Chain Best Practices in 2024 with Case Studies

Table of contents

Embrace digital transformation Prioritize supplier relationship management Develop a robust risk management strategy Foster sustainability Invest in employee training and development Optimize inventory management Implement lean supply chain practices Foster cross-functional collaboration Leverage big data for decision-making Establish supply chain transparency Further reading References

To stay ahead of the competition, businesses need to anticipate, adapt, and align their supply chains to the demands of the volatile global environment. The key to achieving these objectives lies in implementing tried-and-tested supply chain best practices.

But what are these best practices? What practical steps should you take to enhance your supply chain visibility, transparency, and resilience?

In this comprehensive guide, we explore the top 10 supply chain best practices every organization should incorporate to succeed in today’s challenging business landscape.

Embrace digital transformation

1. Supply chain automation

In an era of Industry 4.0, digital transformation is no longer an option but a must for supply chain success. Automation eliminates repetitive manual tasks, reduces human error, and boosts efficiency. Amazon¹, for example, uses robotic systems in its warehouses to increase picking speed, reduce downtime, and improve worker safety.

Source: Amazon News

Check out this article to learn more about supply chain automation.

2. Leverage low or no-code

A no-code supply chain platform is a transformative tool for enhancing business integration. By allowing users to create software applications without the need for traditional programming, they dramatically expedite and simplify the process of building and implementing digital solutions.

Supply chain stakeholders can leverage these platforms to seamlessly connect disparate systems, streamline data exchange, automate manual processes, and enhance real-time visibility. As a result, low or no-code platforms can lead to improved operational efficiency, reduced errors, increased agility, and stronger collaboration across the supply chain, thereby enabling a more integrated and resilient supply chain.

3. Advanced analytics and AI

Advanced analytics and artificial intelligence (AI) enable real-time decision-making, demand forecasting, and risk management. Global adoption of AI solutions in supply chain management is projected to significantly increase (Figure 1).

Figure 1. AI adoption in the supply chain sector

A bar graph showing that AI adoption in the supply chain sector will significantly increased between 2022 and 2025. Implementing AI is one of the most important supply chain best practices.

Source: Statista²

Prioritize supplier relationship management

4. Mutual trust and transparency

Maintaining a good relationship with suppliers leads to better collaboration and mutual growth. Unilever¹, for instance, is recognized for its strong supplier relationships. The company works closely with its suppliers to build trust, share strategic plans, and ensure a high level of transparency in their dealings.

You can also leverage supply chain transparency software.

5. Regular performance assessment

Frequent evaluation of suppliers based on quality, delivery, cost, and other KPIs helps maintain high standards and address issues promptly. Here are some effective supply chain KPIs to use to assess your business performance:

An illustration listing the 5 supply chain KPIs explained in the interlinked article, below the image. Following the KPIs should be one of the supply chain best practices.

Check out this article to learn more about the 5 supply chain KPIs.

Develop a robust risk management strategy

6. Identification and assessment

Identifying potential supply chain risks, from supplier bankruptcy to natural disasters, and assessing their impact is the first step towards robust risk management and a more resilient supply chain. During the COVID-19 pandemic³, most supply chains collapsed due historically focusing too much on lean operations and not having enough flexibility to manage a pandemic.

7. Risk mitigation and recovery plans

Having contingency plans in place ensures business continuity during disruptions. Unilever⁴, for instance, shifted its selling and logistics strategies during the global pandemic, ensuring minimal impact on their operations.

Foster sustainability

8. Eco-friendly practices

Sustainability has now become a critical factor in the supply chain, driven by consumer preferences and regulatory pressures. Companies like Patagonia⁵ integrate eco-friendly practices, such as using recycled materials, into their supply chains, thereby boosting their brand image.

9. Ethical labor practices

Ensuring ethical labor practices across the supply chain not only meets regulatory requirements but also enhances brand reputation. This can be achieved by making sure that your suppliers follow a code of conduct and ethical practices towards their workforce. You need to also make sure that your suppliers are not whitewashing their brand and are being transparent about their practices.

Watch how Starbucks has improved their sourcing practices by working with a third party organization:

Follow Starbucks 15 Year Journey to 100% Ethically Sourced Coffee with Conservation International

Invest in employee training and development

10. Upskilling and reskilling

Given the rapid technological advancements in the supply chain, continuous training of employees is essential. Google, through its ‘Grow with Google’⁶ initiative upskills its employees, ensuring they stay updated with the latest trends and technologies.

Learn more about how to improve your company’s digital dexterity.

11. Encouraging innovation

Creating a culture of innovation empowers employees to find and implement process improvements, enhancing overall efficiency. 3M⁷, for instance, encourages its employees to spend 15% of their time on independent projects, leading to breakthrough innovations.

Optimize inventory management

12. Just-In-Time (JIT) approach

The JIT approach minimizes inventory costs and reduces waste. However, it is also important to make sure that your supply chain does not become too lean. This means that in the case of a disruption, the supply chain should be resilient enough to survive. In other words, you should have enough inventory to fulfill sudden demand spikes. For this, you can expand your network of suppliers and have emergency suppliers on standby or have enough safety stock to prepare for storms such as the Covid-19 pandemic.

13. Inventory visibility

Real-time visibility into inventory levels across the supply chain prevents stock-outs and overstocking. Walmart’s⁸ real-time inventory tracking system is a stellar example of effective inventory management.

Implement lean supply chain practices

14. Waste reduction

Lean practices focus on eliminating non-value-adding activities, thereby reducing waste and improving efficiency. Leverage process mapping within your supply chain to eliminate processes that do not add value to the ultimate goal of the operation. Here is a sample of a basic process map:

A basic process map that needs to be used to reduce supply chain waste as one of the supply chain best practices

15. Continuous improvement (kaizen)

An efficient supply chain embraces the Japanese Kaizen philosophy of continuous improvement. Pioneered by the Japanese automotive industry, the Kaizen approach helps create a waste-free and efficient production line and can be implemented in any other supply chain process:

Kaizen The Secret behind Japanese Productivity

Foster cross-functional collaboration

16. Breaking silos

Cross-functional collaboration breaks operational silos, enhances information flow, and leads to better decision-making. Spotify’s ‘squads’, ‘tribes’, and ‘guilds’ model is a prime example of effective cross-functional collaboration:

An illustration explaining Spotify's collaboration model as one of the supply chain best practices

Source: Atlassian⁹

Leverage big data for decision-making

17. Demand forecasting

Big data analytics can improve demand forecasting, reducing overproduction and stock-outs. Nestle¹⁰, for example, uses predictive analytics to forecast demand accurately, improving inventory management.

18. Consumer insights

Big data also provides valuable insights into consumer behavior, helping businesses align their supply chain strategies to customer needs. Customer data can be used in many ways to improve supply chain operations.

For instance, customer location data can guide the strategic placement of distribution centers to help optimize delivery routes, reducing lead times and transportation costs.

Establish supply chain transparency

19. End-to-End visibility

Complete visibility into the supply chain, from suppliers to customers, enables better decision-making and risk management. To improve visibility, SC managers can:

Leverage an integrated supply chain visibility solution
Encourage data sharing between partners. Improve supply chain data sharing through this quick read.

20. Supplier compliance

Transparency also includes ensuring supplier compliance with regulatory standards and corporate values. Here are some steps to consider:

Communicate your policies and standards with the supplier network
Conduct regular/randomn checks or inspection with suppliers to ensure compliance.
Work with suppliers to help them maintain compliance.
Have a fair incentive/punishment system for your supplier network.

You can also leverage a supply chain collaborate solution through this quick read.

Why optimize your supply chain?

Improving your supply chain is crucial because it directly impacts efficiency, customer satisfaction, and the bottom line. Adopting supply chain best practices and leveraging advanced supply chain management strategies can streamline processes, reduce costs, and enhance customer satisfaction.

Effective supply chain management ensures that supply chain operations are optimized, from sourcing raw materials to the final product delivery, leading to improved inventory turnover and reduced excess inventory. Supply chain software and tools, like enterprise resource planning (ERP), help in better inventory management and demand forecasting, minimizing supply disruptions and manual processes.

Continuous improvement and adherence to supply chain management best practices enable supply chain leaders and professionals to control costs, mitigate risks from natural disasters or supply chain disruptions, and maintain strong relationships with key suppliers and supply chain partners. Furthermore, an efficient supply chain supports environmental sustainability by reducing waste and leveraging technology for greater efficiency. Ultimately, improving your supply chain ensures the entire process is more responsive to customer demand, leading to improved customer satisfaction and a stronger competitive position in global supply chains.

What are the five 5 aspects of supply chain?

1. Planning: This initial phase involves careful planning to ensure supply chain efficiency and the achievement of key performance indicators, utilizing best practices and advanced analytics for improved decision-making.

2. Sourcing of Raw Materials: Supply chain managers focus on building strong relationships with key suppliers and sourcing alternative suppliers to control costs and avoid supply shortages, leveraging supply chain software for efficient order-to-pay processes.

3. Production: Efficient supply chain operations at this stage require streamlining processes to reduce human error and waste, leveraging lean principles and just-in-time production to enhance product quality and reduce costs.

4. Distribution: This phase emphasizes the importance of an efficient supply chain in ensuring timely delivery of the final product, utilizing enterprise resource planning (ERP) and technology to streamline processes and improve inventory management, thereby enhancing customer satisfaction.

5. Returns: Effective supply chain management involves handling returns with continuous improvement strategies to mitigate risks, reduce excess inventory, and maintain customer satisfaction, ensuring the supply chain’s ability to respond to customer demand and supply disruptions.

References

1. Garland, Max (2022). 6 warehouse robotics innovations Amazon showcased in 2022. Supply Chain Dive. Accessed. 25/July/2023
2. Insider Intelligence (2022). Artificial intelligence (AI) adoption rate in supply chain and manufacturing businesses worldwide in 2022 and 2025. Statista Inc. Accessed: 25/July/2023.
3. Harapko, Sean (2023). How COVID-19 impacted supply chains and what comes next. Ernst & Young. Accessed. 25/July/2023.
4. Unilever (2020). How Unilever Food Solutions fast-tracked its Covid comeback. Accessed: 25/July/2023
5. Patagonia. Take-Back Program. Accessed: 25/July/2023.
6. Google. Grow with Google. Accessed: 25/July/2023.
7. 3M. 3M’s 15% Culture. Accessed: 25/July/2023
8. Confluent (2022). How Walmart Uses Apache Kafka for Real-Time Replenishment at Scale. Accessed: 15/July/2023.
9. Cruth, Mark. Discover the Spotify model. Atlassian. Accessed. 26/July/2023.
10. Mixson, Elizabeth. (2021). Enterprise Data & Business Analytics: How Nestlé Optimized the Data to AI Pipeline. Data Analytics Network. Accessed. 26/July/2023

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Principal Analyst

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