Top 20 Supply Chain Best Practices in 2024 with Case Studies
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.
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.
UCBOS offers a no-code supply chain platform to help organizations build integrated supply chain software to improve visibility. The system can equip your supply chain team with dynamic business data models to help improve interoperability and composability.
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
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:
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.
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:
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:
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:
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:
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.
- Top 3 Ways To Optimize Your Supply Chain
- 10 Generative Ai Supply Chain Use Cases
- Know Your Supplier (Kys): Key Components & Checklist
If you need help finding a vendor or have any questions, feel free to contact us:
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