It is said that a chain is only as strong as the weakest link in it. There are many facets of a supply chain and just one weakness can hurt the entire chain. One of the best run companies in the world, Apple, is renowned for its supply chain. The current CEO, Tim Cook, graduated with a degree in supply chain management and has helped to make the company more profitable. He has been credited with their massively increased efficiency and profitability, so there are plenty of reasons why other businesses should pay attention to how they run their operations.
Let’s look into some of the critical things businesses should focus on in order to emulate what’s possibly the best supply chain in modern business. By doing so, you just might make some more money!
Transportation
Perhaps the most well known part of a supply chain is the transportation. Whenever a product is manufactured or bought from a different company, the company must store the product in a distribution center and then move that product to the stores. Having a good transportation chain from suppliers to the distribution centers and then from the distribution centers to the stores is critical. Here’s why.
Many businesses fail when trying to cut corners here. Driver turnover is at an all time high, and there are many complications with delivery companies currently. In fact, in the UK there are two major couriers who have been forced into administration in the last year alone – City Link and Whistl.
Paying just a little bit more on the transportation side can yield huge returns in reduced lead times and other areas. As this article states, investing up front in a business can actually turn out to be more profitable in the long run.
Inventory management
Another important aspect of supply chain is inventory management. Apple does a fantastic job managing the inventory of their products to meet consumer demand while still keeping customers interested in the products.
Whenever Apple launches a new product, it is often sold out within just a couple of hours. The recent Apple Watch launch is an example of inventory management at scale. By combining marketing and distribution efforts in concert with your inventory management policies, a company can save millions or billions a year on markdowns in inventory.
Overall, managing inventory at the store level is a huge aspect of running a successful supply chain. With too little inventory a company faces losing out on sales. When taken in conjunction with too many markdowns due to slow delivery and approaching sell by dates, margins can be seriously affected at the end of the fiscal year.
Why you should bother
Supply chains that are run efficiently will inherently boost the profit margins of the companies in which they are affiliated. Is there really any other viable reason why you should care about your supply chain management other than that?
