At the beginning of December, I finally decided to buy a nice insulated cup, a purchase I had debated for some time. I decided which cup I wanted, and started looking for it in my neighborhood. Three different retailers were out and told me they would not have another shipment until after Christmas. I was disappointed and a little irritated. I finally decided that I wanted it, and now, I couldn’t have it. Who knows exactly where the problem lay – Did the store place the order in a timely way? Did the manufacturer have problems? Was shipping an issue? Either way, it all came back to supply chain management.
As an avid shopper, I consider the consumer products industry a mature industry that knows how to sell products to consumers and how to do it well. The market seems to be saturated, from insulated cups to tires to clothing to frozen food, and they all seem to be getting my paycheck.
As an accounting professional, however, I can see potential pitfalls for the consumer products industry, and they start and end with the supply chain. Supply chain execution begins with demand for a product and involves the efficiency with which the demand is met. Fulfilling the demand involves many moving parts – production planning, material sourcing, transportation management and warehouse management. Your company is a player, but so are suppliers, other manufacturers, distributors and transportation providers. And you must make sure that information and money flow appropriately.
Even if you’ve run a successful supply chain for years, you may have new challenges as your business adapts to new market challenges, and additional efficiencies could be gained to help edge out the competition. The product line might diversify or take a different direction. Your suppliers and processes may change. Loyal partners may change ownership or personnel. It’s also no surprise that there will be updates in technology, too. So, where should your focus be in order to adapt and create the most responsive supply chain possible?
Focus on Your Customers
It’s easy to focus exclusively on the product. In fact, many manufacturers do. They are invested in sourcing the materials and creating new and innovative products. I would suggest, that although you must have great products, you also must meet your customers’ needs for on-time, affordable shipping, reasonable return policies, and an advocate when orders are delayed or incorrect. You ignore your customers at your own peril. Keeping them happy is essential to building the relationships that will keep your company competitive.
Focus on Your Inventory
Is your inventory housed in a warehouse you control or does someone else house it? How are orders filled? Do you understand the optimal level of inventory to meet your sales? Are you able to meet demand quickly? Getting the right part to the right place at the right time is a critical marker for an efficient supply chain, and choosing responsive vendors is equally important. If you haven’t asked these questions lately, you should employ the available tools and best practices to determine how well you’re managing your inventory. Streamlining your inventory and fulfillment process could help your tax burden and your bottom line dramatically.
Focus on Your Data
Business owners and managers cannot act on trends or forecast sales without accurate, timely information and analysis. It’s not enough to simply have the data; you must be able to translate it into action. Trending, forecasting and budgeting are all supported by insightful data analysis. Accurate information helps to create greater efficiency and reduced costs.
By effectively managing your supply chain, you are better able to handle the occasional curveball you know is coming your way sooner or later. The HORNE PMM team is available as a resource for your supply chain management needs, short-term or for a longer project.
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