9 Ways to Improve Your Supply Chain Management

Published on: Mar 30, 2023 by Robin Wiedenhoeft, CPA

Updated on: June 12, 2024

Supply chain management (SCM) is the coordination and management of activities involved in the production and delivery of goods and services.

In the manufacturing industry, effective supply chain management is essential for reducing costs, improving efficiency, and increasing profitability.

9 Improvements for Your Supply Chain Management

1. Inventory Management

Inventory management is a critical aspect of supply chain management in the manufacturing industry. By keeping inventory levels low, businesses can reduce costs associated with storing and maintaining inventory.

Additionally, businesses can also use inventory management techniques, such as just-in-time (JIT) and kanban systems, to ensure that inventory is replenished as needed and reduce the risk of stockouts.

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2. Production Planning

Production planning is also an important aspect of SCM in the manufacturing industry. Effective production planning can help businesses reduce costs by ensuring that production schedules are optimized and that resources are used efficiently.

Businesses can use techniques, such as constraint-based planning and simulation, to optimize production schedules and identify bottlenecks.

3. Procurement

Procurement is the process of obtaining goods and services from external suppliers. In the manufacturing industry, effective procurement can help businesses reduce costs by negotiating better prices with suppliers and reducing lead times.

Additionally, businesses can also use e-procurement systems to automate the procurement process and reduce the risk of errors.

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4. Logistics and Distribution

Effective logistics and distribution can help businesses reduce costs by optimizing transportation routes and reducing lead times.

Additionally, businesses can also use technology, such as transportation management systems (TMS), to automate logistics and distribution processes and reduce the risk of errors.

5. Risk Management

Risk management is an important aspect of SCM in the manufacturing industry. Businesses can use techniques (such as scenario planning, simulation, and sensitivity analysis) to identify and mitigate risks. This can include risks associated with suppliers, logistics, and the overall supply chain.

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6. Sustainability

In recent years, sustainability has become an increasingly important aspect of SCM in the manufacturing industry. Businesses can take steps to reduce their environmental impact by using more sustainable materials, implementing energy-efficient processes, and reducing waste.

Additionally, businesses can use life cycle assessment (LCA) and other tools to measure and communicate their sustainability performance.

7. Technology

Businesses can use technology (such as enterprise resource planning (ERP) systems, logistics management systems (LMS), and advanced analytics) to automate and optimize supply chain processes, improve decision-making, and increase visibility across the supply chain.

8. Collaboration

Collaboration is also an important aspect of SCM in the manufacturing industry. Businesses can collaborate with suppliers, customers, and other partners to share information, reduce costs, and improve overall performance.

For example, businesses can use collaborative planning, forecasting, and replenishment (CPFR) systems to share data and optimize production schedules.

9. Communication

Effective communication is essential for supply chain management. Businesses can use communication tools (such as enterprise social networks, instant messaging, and video conferencing) to share information and collaborate with partners.

Additionally, businesses can use data visualization and other tools to communicate key metrics and performance indicators.

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Supply chain management is critical for the manufacturing industry. By implementing strategies such as inventory management, production planning, procurement, logistics and distribution, risk management, sustainability, technology, collaboration, and communication, businesses can reduce costs, improve efficiency, and increase profitability.

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Additionally, businesses can improve communication and collaboration with suppliers, customers, and other partners to share information, reduce costs and improve overall performance.

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Biz Tip Topic Expert: Robin Wiedenhoeft, CPA

Robin is a Senior Manager with SVA Certified Public Accountants and helps clients establish internal financial reporting procedures and provides year-end financial reporting services.

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