Are you suffering too?
(Don’t miss the free download and event below)
I see these same mistakes, day in day out.
Across all industries, across all countries. And it’s been that way for as long as I can remember… So let me share some thoughts that might help you avoid these mistakes and boost your Supply Chain performance.
I have a ‘top 10’ list of common Supply Chain mistakes. But let’s not call them mistakes, because that sounds too negative.
We’ll call them ‘missed opportunities’. And generally they are really expensive ‘missed opportunities”!
Expensive in added cost and expensive in poor customer service and reduced sales.
So out of my top 10, let me share 3; that should be really easy for you to fix. So think of your own organisation as I describe these. And how these ideas might be put to good use in your organisation?
1. Cost Reduction
All organisations struggle to reduce costs. And of course as time passes, it gets harder and harder to reduce costs, because all the easy cost reduction has already been gained.So we need to get a bit smarter. Ask yourself how many times do you ‘touch’ your products? By that I mean, how many times a product is handled between being received from your factory or supplier, to being delivered to your customer. Think about it now. Unloading, checking, moving to storage location, putaway in storage, picked as part of an order, checked, packaged, loaded…Is it more than 10 times? That’s not good. If it’s only 6 or 7, you are doing well. So why is this important to costs? Simply because every time you touch a product you are incurring costs. Equipment costs, labour costs, damage costs and so it goes on. So now think about how you can reduce the amount of touches. Can you go straight from unloading to the storage location? Perhaps you can introduce some automation in product handling? Maybe there are ‘touches’ that can be totally eliminated because they are really not necessary.
As an example, I was at a client’s warehouse this morning where they operate a RoRo (Roll On Roll Off) system at the receiving dock. Full truck loads arrive from the factory. 20 pallets ‘slide’ off the truck in one go, using the RoRo system. The driver does all this.The forklift drivers then scan each pallet and take them away to storage. 1 touch! (example photo courtesy of joloda.com)
Also related to the number of touches is the ‘amount’ you touch.By this I mean, are you mainly handling product by the pallet load, the layer, the carton or by eaches? An ‘each’ being an individual item or unit of sale.For example we might have bottles of water (eaches), that are stretch wrapped in sixes (an inner), and then 4 of these ‘inners’ are on a stretch wrapped base or in a carton (an outer), of which 40 cartons (outers) fit on a pallet.Obviously the larger the unit that we handle, so our handling costs ‘per unit’ are reduced.That’s why managing customer order sizes is so important! What could you do to encourage your customers to order in larger quantities? Or at least by pallet, layer, or carton.Of course there are other easy targets for cost reduction, that we might discuss at a later date, but this one is often an overlooked ‘opportunity’.
2. What do you Measure?
Key Performance Indicators (KPIs) are vital to managing anything effectively. What’s that great acronym for KPIs? They need to be Smart.
The common mistake in using KPIs is to have too many! I have seen businesses that produce monthly Supply Chain KPIs that resemble the New York Phone Book! (OK, for anyone under 35, go and Google ‘Phone Book’)
Sure, within a business lots of different KPIs are required, but try to ensure you customise the KPIs for each ‘level’ of management with in the business.
Also make sure that the KPIs you use, also drive the right behaviours!
For me, some really important KPIs are these:
Additional KPIs that are really useful in helping you reduce costs are these: (because they highlight high cost areas)
- Cost per Order Processed
- Cost per Order Handled
- Cost per Unit Delivered
- Average Order Value (track this to look for low value / high cost orders)
3. How well do you manage your Customer Service?
One of the most important elements of good Supply Chain management, is understanding customer needs, developing appropriate customer service offers and policies, and then managing that service offer effectively.At our seminars I often share case studies demonstrating the impact of not getting this right. The lost sales, the wasted money.In fact this element is so important, rather than try to summarise it here, I’ll give you a Guide I have written that covers this topic really well.
Just enter your details here and we’ll email you the Guide right away.
I’d love to share all of my top 10 common ‘missed opportunities’ in detail but that would probably require me to write another book. (Maybe coming later)
But what I can do is share them with you at our next free Supply Chain Secrets seminars. These are coming up VERY soon in Brisbane, Sydney and Melbourne. Have you registered yet?
I’ll be showing our guests not only what these common ‘missed opportunities’ are but how best to improve their Supply Chain team’s performance to grab some of these opportunities, and so boost Supply Chain performance.
If you haven’t got a seat yet and want to come along, just jump on this link to register. All the details are there. But be quick as 75% of the seats have already gone.