There is a lot of coordination involved in starting a new business. Marketing, product development, researching your target audience, and simply setting up your HR procedures and business structure can take up all of your time. However, another important element is planning your supply chain.
COVID-19 put supply chain management in the spotlight, especially in the early months of the pandemic when ports closed, flights canceled, ground freight stuck in locked cities, and factories shut their doors.
Thousands of businesses, from large retailers to small online sellers, ran out of inventory or watched as inventory stranded in their warehouses passed its literal or metaphorical expiration date and could not be forwarded for delivery or distribution.
A survey by the Institute for Supply Management (ISM) found that 75% of US companies had disruptions due to the pandemic and 44% had no plan to deal with it.
As 2021 progressed, no one could claim that supply chain logistics was a trivial matter. Planning ahead is critical to avoiding these six supply chain pitfalls awaiting new business owners.
1. Not enough data
You need reliable real-time data on the progress of your goods, their handling and the conditions under which they are located. With fast and accurate data, you can react quickly to delays or eliminate setbacks without leaving your customers in the lurch. Over half of the respondents in the ISM study said they struggled to get supply chain information from China in February and March 2020, making it even more difficult for them to find out what happened to their orders in order to avoid impatient customers to satisfy.
This is even more important when you are shipping temperature sensitive or fragile items that require careful handling and certain conditions. Consumers have little patience with orders that arrive damaged or that look different than expected. A cold chain temperature monitoring system that provides real-time data helps you ensure that products arrive in perfect condition and have not been compromised.
Of course, this requires a digitized supply chain analysis system. Keeping track of your shipments with an Excel spreadsheet that is manually updated every time you receive an email notification doesn’t cut it, even for small start-ups.
2. Tracking the wrong KPIs
By setting the right KPIs, you can measure the right metrics so that you can focus your efforts on the issues that are having the greatest impact on your business. When working with carefully selected KPIs, you need to understand your customers’ top concerns, such as: B. Delays in delivery processing, prices or item conditions on arrival.
For example, your KPIs can focus on fulfillment times, which means that you have to prioritize the fastest but more expensive logistics provider. However, if your customers are lucky enough to wait a few more days for their orders to get free shipping, then it’s probably better to work with a different shipping partner. Find out which KPIs are most important to your target market, your product itself, and your business needs.
It is also important to align the KPIs in all teams to optimize the entire supply chain. There is no point in saving money by grouping orders into fewer and larger shipments when you have to hire additional warehouse staff to handle the large volume of product.
3. Forget about planning the unexpected
If there is one lesson we should all have learned by 2020, resilience is vital. Natural disasters, strikes, political upheavals and more can unfold in the blink of an eye and toss a wrench into your supply chain. So don’t build a supply chain that is so rigid that the slightest disruption or delay affects the entire network.
You also need to consider future business growth. Can your supply chain scale with you as your business scales? With 40 orders a day everything might go smoothly, but what if you have 80, 150 or more to process?
You need to keep that sweet spot between being slim and wasting money on inefficient and unnecessary alternate partners.
4. Build an isolated network
Ensiled teams create a fragmented supply chain with limited visibility. They are more common in large, complex, and extended supply chains. However, the decisions you make when you start your business determine whether your teams and tools can work together smoothly or exist in isolation.
When data is stored on separate platforms, you cannot see any ways to reduce costs or identify the cause of a failure.
Now lay the foundation for a unified and fully visible supply chain by making sure that data from all your logistics, warehouse, supplier and other partners is consolidated into a single platform for analysis. Then make sure you set up simple communication methods for each entity.
5. Put the price above everything
You want to spend as little as possible on supply chain management, but still want excellent service and execution.
If you are only looking for the cheapest partners, you can compromise on other topics such as reliability, speed or transparency of quality assurance. Your logistics partners are fundamental to your business success. So be ready to invest a little more financially in a partner who will always have your back.
The business relationships in your supply chain must be valuable both qualitatively and quantitatively.
6. Missing security checkpoints
Ignoring or eliminating security concerns creates problems. Privacy regulations are on the rise, and a data breach can result in a hefty fine and serious damage to your business reputation.
Make sure that all your logistics service providers, suppliers and suppliers meet the security requirements and data protection standards.
It is equally important to protect your physical product. Use logistics monitoring tools that will notify you if someone tries to disrupt the packaging and make sure the containers have seals and tamper-proof locks so you are aware of any attempts to steal or tinker with your goods.
Supply chain management doesn’t have to be a minefield
Supply chain management is one of the many important elements of a successful company, regardless of your product. By considering data availability, KPI optimization and security issues, avoiding silos, planning for all contingencies and considering the entire relationship with each partner, new business owners can avoid the most common pitfalls in the supply chain and get on the road to success.