So many factors effect supply chain efficiency and so many FDs have experiences to share; it made for a lively discussion in the workshops at our recent NWFD Network events.
The most popular scenarios that effect supply chain efficiency include;
- Elements coming from many different suppliers
- No spare parts or reserves of stock
- Changes in customer specification
- Letting one supplier dominate – always have reserve options at all levels
- Always have a contingency plan
- Legal processes
- Financial stability of your suppliers and their suppliers
- National disaster
When it comes to mitigating risk in the process, many FDs suggested that making yourself valued to your suppliers was key – becoming an important customer to them was an effective method for ensuring efficiency. Whether that is the size of your order, the margins, paying on time or just developing a favourable working relationship.
Some FDs discussed scenarios where it became necessary to buy a supplier or buy large amounts of reserve stock from them as a safety net, citing considerable down time if anything were to happen to that part of the supply chain.
The ideal scenario means a business always knows the competitors of their suppliers at all levels and has a backup plan in case of incident.
When looking at how far the supply chain needed to be considered, most FDs in the room suggested through to the smallest supplier or most minor element to the process as any interruption can cause massive disruption and significant cost implications.
It is beneficial to identify integral elements of your supply chain and work to make them more like strategic partners than just suppliers.