Best Practices for Supply Chain Management

What is Supply Chain Management?

The design, planning, execution, control, and monitoring of supply chain activities with the following objectives:

  • Creating net value
  • Building a competitive infrastructure
  • Leveraging worldwide logistics
  • Synchronizing supply with demand
  • Measuring global performance


Best Practices for Supply Chain Management

Increase Inventory Velocity. Inventory must move quickly; turns should be high. It must flow efficiently and effectively, from suppliers or manufacturing sites to customers.


Lean Logistics Complements Supply Chain Management. Both lean logistics and supply chain emphasize pulling, not pushing, products through the supply chain. Both recognize and lean removes the waste created by excess inventory and time, and the need for supplier performance.


Improve Supplier Performance. Success begins with supplier performance. They must deliver quality items that are complete, accurate, and on time. Collaboration is important; whether the products are finished goods or manufacturing materials, the need for strong supplier performance is imperative.


Maximize Inventory Yield. Apply inventory management strategies to build practices which 1) adjust your pricing to match booking demand to maximize revenue during high season, and 2) increase revenue during the slow season, and 3) change prices to match ongoing fluctuation in supply and demand.


Compress Cycle Time. Cycle time runs from the time the need for a product determined and continues until it is delivered to the customer or to the retail location. The length of global supply chains adds to the challenge. To maximize inventory yield, there is a window of opportunity to get the maximum priceand the maximum yield for products.


Utilize Meaningful Metrics. There are numerous measures for companies and their supply chains. Many are measures for the sake of metrics with little meaning to C-level executives or with little value in measuring supply chain performance. Meaningful metrics are procurement orders delivered complete, accurate, on time and time related (e.g., days of inventory on hand, cycle time and others).


Segment the Supply Chain. The most effective organizations segment their supply chain and focus performance where it is most beneficial. Instead of practicing one-size-fits-all Supply Chain Management, a tier-based strategy focuses on profit margin, days of inventory, or similar important metrics.


Employ Supply Chain Technology. Supply chain technology is critical to managing a global supply chain. It should provide efficiency and visibility throughout the supply chain.