Adapting Supply Chain Management to the Age of Disruption
Sometimes it feels like the only constant in the field of supply chain management is change. Change is inevitable in any endeavor. New markets, customers, information, and technology all bring about change. But this year, it may feel like change is coming at such a rapid pace that it’s impossible to keep up with it.
If you’re finding it’s difficult to keep abreast of all the changes impacting your industry, you’re not alone. A few statistics from an infographic shared by Alloy reveal that most manufacturers and distributors are feeling the effects of the rapid changes brought about by the pandemic.
- Among companies that faced supply chain disruption over the past year, 32% said it took a month or longer to recover.
- The pandemic impacted 95% of companies—but only 56% had a plan to deal with disruptions from China.
- Only 27% had full visibility into their supply chain.
As you read this list, do you recognize your own company in any of the statements? If you do, there’s still time to make changes. Supply chain management can be challenging, but the changes required to adapt to the new reality aren’t impossible.
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Four Tips to Remain Flexible in Supply Chain Management
There are several ways in which distributors meet the challenges of change. To remain flexible and able to meet customer demands, try these tactics.
- Find Alternative Suppliers
Smart distributors have a list of alternative suppliers at the ready in case of supply chain disruption. It doesn’t matter where or why a disturbance originates—it could be a virus spreading from China or political turmoil in South America—but disruption is a fact of life. Pre-vetting a list of suppliers now, before you need them, ensures you’ll be able to find replacement goods should you encounter delivery problems.
- Ensure Supply Chain Visibility
Improving supply chain visibility is essential to weathering this and any disruption. Transparency along the entire supply chain can help you identify critical delays and shortfalls among current suppliers and find new ones in time to fill customer orders.
- Estimate Both Actual and Potential Availability
Good ERP software can help you gain insight into actual product availability in your warehouse. The ability to scan items into receiving and immediately update your ERP system through cloud software provides real-time visibility into stock counts. With an integrated and visible supply chain, you may be able to assess potential availability if your vendors can connect with the ERP. By viewing both actual and potential stock, you may be able to close more sales or larger sales with confidence.
- Optimize Personnel Safety
Your distribution warehouse is only as good as the people running it. If your critical workers turn up injured or sick, you may find yourself scrambling to fill orders. Focus on personnel safety issues by ensuring you have adequate personal protective gear, hand sanitizer, washing stations, and other necessary supplies. Consider running updated safety training. Keeping everyone healthy and safe is vital to the smooth running of your operations.
CRM and Supply Chain Management: The Hidden Link
In addition to taking these steps to ensure a flexible approach to supply chain management, there’s another option available. Your CRM system offers insight into operational forecasts you may have overlooked.
Traditionally, CRM systems have been viewed as a sales or marketing function. Yet, the data contained within these systems can be used by multiple departments to improve supply chain management.
Tracking Customer Sales for Forecasting
CRM systems track sales at the customer level, but they can provide data that enables you to improve forecasting. Using the full suite of tools available within your CRM system, you may be able to:
- Predict customer ordering patterns
- Identify periods of high and low demand
- Forecast according to these patterns
Data within CRM systems can also be organized according to product sales instead of by customer sales. This will enable you to view and potentially predict spikes in specific product sales. You may also be able to identify laggards and create incentives to boost lackluster sales.
Instead of relying solely on the finance system for forecasting data, a combination of elements from the CRM system, operations, and finance may provide a more accurate forecast. Because the CRM reflects past sales by customer and product, you have two additional data elements to analyze for better supply chain management.
As you’re reviewing your supply chain CRM, look for that handful of customers who comprise a significant portion of your business. These customers represent a risk to your business. If a small number of customers account for more than 20% of your company’s orders and should go out of business, you may find yourself scrambling for new customers when it can be challenging to find them.
Another area to check is the net terms you’ve extended to that handful of customers. If they have extended payment terms (net 30, 45, or 60), are they paying on time? If they seem slow to pay, consider discussing adjusted payment terms, partial payment, or even a partial prepayment with them. You can’t afford to write off a significant chunk of your A/R as bad debt when sales may be shrinking.
Good Supply Chain Management and Clean Data
Using both the tips to improve supply chain management and the CRM system to enhance forecasting ability relies upon your company’s ability to input clean, accurate data into the system.
ERP systems that rely on scanned barcodes for warehouse management have an advantage over other systems in which data must be manually entered. Barcode scanners enhance accuracy by avoiding keying errors that can lead to mistakes in stock counts, such as other problems.
Customer and product data must be kept free from errors, too. While product data can be updated through the warehouse and distribution center, customer data may need a third-party mailing list provider to scrub the list of errors. If your company sends paper-based catalogs or other direct mail, consider having the mailing company run an update file of change of addresses against your database.
Have your list cleaned of mistakes and duplicate addresses, too, and make sure each customer has just one file. It’s incredible how quickly one customer ends up with several records in the database because the customer varies their address with each other. “James Smith” may have three files under James Smith, J. Smith, and J.H. Smith, or even more records if he also abbreviates Street and St. Your company will save time, money, and headaches if you consolidate duplicate addresses. Have your list vendor flag duplicates and provide a report that can be reviewed by your sales staff or others within your company to remove duplicates and correct mistakes in the address fields manually.
No Such Thing As Business as Usual
Distributors continue to face a world in which supply chain disruption is the norm. And yes, if it’s not the pandemic now, it will be something else tomorrow. There’s no such thing as business as usual in this environment. To succeed, your company must remain flexible and adapt to new opportunities, challenges, and threats as it continues to sell products in a world where ports, airports, and transportation centers can close at a moment’s notice. Taking steps to remain flexible, minimizing risk, and using CRM and other data sources to pinpoint opportunities is an excellent step to keeping your business healthy and viable.
Mindover Software is a software reseller with a broad range of accounting, ERP, finance, customer relationship management, and other software products. For more information, please contact us or call 512-990-3994.