Building a comprehensive supply chain is incredibly important for ensuring the steady movement of stock through your business. Unfortunately, supply chains can collapse all too easily. Understanding supply chain patterns and how they have the potential to impact your business certainly means understanding how they work, but it’s just as important to understand when they aren’t working–and why.
The “Safety Stock” Myth
“Safety stock” is a concept that effectively divides the stock you keep in your warehouse into “working stock,” the stock that you actively need to have on hand in order to deal with business and customer needs, and “safety stock,” which is intended to provide additional stock that will help ensure that you can meet demand at times when it rises higher.
Often, safety stock exists because the company feels that it cannot meet the needs of its customers, and it might need to have some additional stock on hand to manage the natural ebb and flow of customer demands.
However, safety stock relies on the idea that supply and demand occur in even distribution. It introduces a number of potential challenges that can make it more difficult to effectively manage your inventory and your supply chain.
- If you do not regularly rotate your inventory, your safety stock may end up going bad before you can use it.
- You may end up with increased warehousing costs for stock that you may or may not actually need for your business.
- Inventory requirements are rarely based on any standard distribution system, which means that it may prove more difficult than anticipated to predict the amount of stock you need to have on hand.
Safety stock, as a concept, was a more essential need in the industry before the days of computer algorithms and software that had the capacity to effectively manage inventory needs.
Antipatterns in Inventory Management
Antipatterns in inventory management are “solutions” to your supply chain problems that ultimately backfire. On the surface, an antipattern looks like an effective solution to keeping the inventory you need on hand and ensuring that you can keep up with consumer demand. There are several critical ways you can cause your supply chain management solution to be less effective than you initially thought–challenges that could lead to unexpected supply chain challenges.
Inadequate Buy-In
Supply chain management is critical for your business. You need to know where your inventory is coming from, how much of it you have on hand, and how it moves through the supply chain–and you need to have solutions in place that will help you determine what to do when those solutions fail.
That requires high-level decision-makers within the company to commit to maintaining supply chains. You need the funding, the manpower, and the decision-making support to effectively manage your supply chain.
If your upper-level management isn’t providing those solutions, it could prove catastrophic to your overall inventory management or the effectiveness of your supply chain.
Ignoring Uncertainty and Challenges
2020 and 2021 have been ravaged by supply chain issues, and that situation has not grown much better moving into 2022. Uncertainty is a real problem for many businesses–and if your business hasn’t been impacted yet, there is a very real likelihood that it will be in the future. Unfortunately, many upper-level managers choose to ignore potential supply chain problems until they cause serious disruption.
If you’re ignoring uncertainty or the challenges you may face, you’re unable to put the tools in place that will help you deal with them effectively. Instead of addressing those problems before they appear, you’ll find yourself scrambling to deal with them after the fact–and often using less effective solutions, or dealing with greater overall disruption, as a result.
Skipping Supply Chain Optimization
Often, supply chain forecasting and optimization are treated very separately as you make decisions about how you will manage your supply chain needs. However, supply chain optimization is a critical part of the process. When you optimize your supply chain, whether that means narrowing down your raw material sourcing or broadening them in an effort to ensure that you can access the goods you need when you need them, you will find it much easier to forecast your future supply needs as you move them through the chain.
Choosing the Wrong Supply Chain Software
Using the right supply chain software is critical. All too often, business decision-makers think that any supply chain software will manage their needs “well enough.” In all too many cases, however, “well enough” falls apart as you try to use that software to manage your inventory, track your suppliers, and ensure that everything flows smoothly as it moves toward your business.
Instead, it’s critical to invest in the right supply chain software solution. Choose a solution that allows you to effectively manage your specific needs, and that allows you clear insights into every step of the process, rather than leaving you scrambling to make the most of tools that simply do not meet your needs.
Jumping on Trends
There are a lot of trends in supply chain management, just like there are in any other industry–and there are a lot of people pitching “solutions” to supply chain challenges that could ultimately leave your business scrambling. Instead of choosing solutions filled with the latest buzzwords or handing over your supply chain management to the sales team in the hopes that they can effectively forecast future customer demands, try using proven solutions, including software solutions that can help you more effectively predict future trends and keep up with consumer needs.
Are You Managing Your Supply Chain Effectively?
Effective supply chain management is critical to your business. Equally critical is understanding the challenges and trends that could get in the way of your supply chain solutions. You need a software solution that will allow you deeper insights into trends, needs, and the movement of goods through your system. Contact us today to learn more about how we can help.
