Better Flow and More Profit: Supply Chain Optimisation Tips

Mitch Denton   |   March 9, 2020
Supply Chain title image

With 2020 well and truly underway, there's an industry-wide push for cold chain/supply chain optimisation.

This is due in part to the United Nations Sustainable Goals Act and the push for more profitable margins.

46% of small businesses don't track their inventory, or use a manual method to do so. The chances of those small businesses converting into big businesses are incredibly low unless they start to consider supply chain optimisation. 

If you're a small business you can scrape by fulfilling orders as quickly as you can and hoping that your suppliers will still have what you need in stock.

If you want your business to grow, you're going to need to do things smarter. Read on as we look at some tips for how to optimise your supply chain.

1. Source Locally

Shipping your supplies from halfway around the world may be cheaper in some cases. There are other considerations to make, however.

Firstly, global shipping is going to take much longer than using a local supplier. Local suppliers make it easier to keep on top of your inventory and if you need to order more supplies because you've run low, you don't have to wait nearly as long for them to arrive.

Another aspect of your business that is becoming increasingly important is supply chain transparency. Customers are much more interested in the origins of the products they buy. They want to be sure that products are ethically sourced and parts aren't being made in some sweatshop with appalling workers' rights.

They also care about the environmental impact of the products they buy. A global supply chain has a much larger carbon footprint than one that is closer to home. You should also aim to minimise the amount of waste that you produce.

2. Share Information With Your Suppliers

This is simple to do, yet can make a huge difference. 

If you know your sales have gone a bit quiet, then let your supplier know. They're busy churning out the same amount of components as last month, and if you're not going to order as many then inevitably costs are going to rise.

Conversely, if you're seeing serious sales growth, give them as much warning as possible so that they can be sure to have enough inventory to meet your needs.

3. Find Your Tier 2 Suppliers

You know who your suppliers are, but do you know who supplies your suppliers? These are your Tier 2 suppliers.

Their costs and their lead-times will have a tangible impact on your own. If you don't know who they are, you're missing out on valuable information that can help to optimise your supply chain.

It may be the case that a Tier 2 supplier is involved with more than one of your direct suppliers. If this is the case, you may be able to contact the Tier 2 supplier and negotiate volume discounts that a single supplier wouldn't be able to do. This will benefit both you and your direct supplier, so it really is a win-win.

4. Improve Inventory Management

Inventory management is about more than just keeping a tally of what products you have in stock.

You also need to consider how much stock you will need in the future, how much new stock is coming in, lead times for that new stock and more. Managing all of this is a complex process, and the better you can get at it, the smoother your supply chain will be.

You may also need to take wastage into account. If you're selling perishable goods, not every item in your stock will be suitable for selling. This is particularly key in the fresh food industry where a viable product one day can be unfit for use the next. Being able to monitor the age and freshness of your produce is vital. 

5. Don't Be Afraid to Outsource

If you think that this all sounds like a lot of hard work, then you'd be right. 

As your business grows, it's almost impossible to be able to handle everything yourself and still have a truly optimised supply chain. The good news is that there is plenty of help out there if you're willing to pay for it. 

It may seem that outsourcing is going to affect your bottom line, but if it helps you to optimise your supply chain effectively, you can make more money in the long-term.

6. Take Advantage of Technology

Another great source of help is modern technology. There are incredible products and systems out there designed specifically for helping you optimise your supply chain.

Take the earlier example of fresh produce. Having to check the quality or ripeness of every individual item is labour-intensive and costly.

Now imagine you had smart sensors that could provide you with this information in real-time without you having to lift a finger. You'd be able to prioritise which products need to be despatched and know at a glance how much viable produce you have available.

The use of cloud-based data management systems allows everyone in your supply chain to instantly access the information they need from wherever they are in the world. All that information can be updated in real-time so that you're never left playing catch up.

Utilising this kind of tech can take your supply chain management to the next level. 

7. Build Relationships With Suppliers

At the end of the day, your business lives and dies by its suppliers.

If you can't get the supplies you need to create the products you're going to sell, then your business is dead. That's why it's vital that you build strong relationships with your key suppliers. Keep them in the loop with business decisions that could affect your demand, work with them to try and streamline your supply chain processes, and above all make sure you keep them on side.

If you treat your suppliers badly, you may find they prioritise their other customers over you.

Are You Looking for Support With Your Supply Chain Optimisation?

You don't need to do all the work of supply chain optimisation yourself. There are companies out there that can help, including our own.

Our RipeTime Sensor technology allows you to accurately forecast the ripeness of produce, receive real-time alerts and automate ethylene cleaners & other ag-tech systems. It can help you automate the entire process of caring for your stock, as well as giving you access to real-time data on the amount of produce you have available.

Do you want to be able to use your products' market-ready condition to inform your shipping priorities? Then register your interest today. 

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