business Developing Supply Chains You Can Count On March 28, 2023 Attention businesses…are your supply chain practices agile? It could give you a competitive advantage. Here are four best practices to consider. Companies that adopt “agile” supply chain practices can reduce their risks and gain a competitive advantage through their ability to promptly respond to customers. The COVID pandemic has provided some valuable lessons on how to achieve such agility. Here are four best practices to consider. 1. Leverage Technology Companies can use cloud technology and automation to improve the visibility of their supply chains. Technological advances allow them to connect all the players, from suppliers and transit companies to the shop floor. Real-time, 24/7 visibility increases accountability and enables proactive responses that can catch and fix potential roadblocks. This can also facilitate more effective sales and production planning. Predicting demand fluctuations plays a central role in supply chain management, and simple spreadsheets won’t cut it anymore. Data-driven predictive analytics generates more accurate demand forecasting and demand sensing — and, in turn, enhanced decision-making and more timely adjustments. Artificial intelligence and machine learning tools can process mountains of data from disparate sources to produce actionable intelligence. 2. Build Resiliency into Your Supply Chain The just-in-time approach to inventory has been a mainstay for decades now. While it has helped manufacturers greatly increase their efficiency and cut costs by minimizing inventory, the pandemic exposed its vulnerabilities — in particular, the lack of flexibility when the source of a vital component can’t deliver. In today’s unpredictable world, you need resiliency to deal with potential disruptions, from global health catastrophes to extreme weather. To help prevent shortages, companies are employing such concepts as near-sourcing, diverse-sourcing, multi-sourcing and dual-sourcing of both supplies and transit services. “Port diversity” also is advisable in case activity is shut down or backed up at your preferred port. 3. Nurture Critical Relationships Maintaining healthy relationships with your primary and secondary suppliers calls for open communication and shared goals. When conflicts or disputes arise, regardless of how minor, work for a quick resolution that satisfies both sides to prevent lingering ill-will that could come back to haunt you. You want to be at the top of your suppliers’ lists when they’re making hard choices about how to allocate their limited products and services. It’s also important to have strong relationships with multiple logistics providers. This can be indispensable when containers, drivers and the like are in high demand and short supply. 4. Prioritize Supply Chains Until recently, many companies have resisted making the financial investments necessary to build resilient supplier networks, often disregarding supply chain issues until problems happened. This reluctance generally was based on a perspective that supply chains are simply a cost center. It’s much harder to stick your head in the sand about the importance of solid supply chains now. Companies that prioritize reliable supply networks will be well-positioned to pull ahead when it comes to meeting customer needs during a disruption or crisis. And it starts at the top, with leaders who recognize the strategic value of supply chains. Your company might even want to consider creating its own logistics system. That way, you won’t be dependent on third parties and held hostage to their pricing and scheduling. Some companies that already had adopted a do-it-yourself approach before the pandemic ended up with additional revenue by selling their logistical services to other companies. Remain Vigilant It’s essential stay on top of your supply processes, procedures and flows. Regular monitoring makes it easier to identify bottlenecks and other looming problems early and respond appropriately, preempting the kinds of breakdowns that can hurt your bottom line or value. Contact our CFO Services team for assistance implementing these best practices at your organization.