The difference between a successful business and one that goes bankrupt can be as simple as supply chain performance. If you wish to keep your manufacturing supply chain efficiency up, then you need to avoid mistakes like poor demand forecasting and overreliance on single suppliers.
Manufacturing supply chain management can make or break a business. That's why avoiding the mistakes mentioned below can be important in streamlining operations, improving forecasting, and regaining financial control.
Poor Demand Forecasting
You are never going to predict your sales accurately every year. However, inaccurate forecasting can be a big profit killer. That's why you have to try and get as close as you can.
Both ends of the spectrum are detrimental to business. If you overestimate demand, then you will have excess inventory, higher carrying costs, and wasted raw materials.
Underestimating demand, on the other hand, can lead to stockouts, production delays, and most importantly, unhappy customers. You don't want your customers leaving you and finding some other business to support, because you don't deliver your products on time due to a lack of stock.
Relying on a Single Supplier
This is another big supply chain efficiency mistake. Never rely upon one supplier, especially for critical materials. If anything happens to that particular supplier, like delays, shortages, or anything else, you are going to be in big trouble.
Instead of scrambling during emergencies to find another supplier, have a roster of different suppliers that you deal with. This way, you can also compare products from them and compare their customer service to see which one serves you best.
Lack of End-to-End Visibility
Without end-to-end visibility, manufacturers have no idea what's actually going on with their supply chain, if there are deficiencies, or any blind spots.
Blind spots lead to:
- Delayed responses to disruptions
- Inaccurate delivery timelines
- Poor decision-making
- High operational costs
To avoid all of this, using digital tools like ERP platforms and real-time tracking can help. Also, manufacturing-focused outsourced accounting experts can assist with profit margin improvement.
Neglecting Quality Control in Manufacturing Supply Chain
Quality control isn't just about the production floor. It should extend beyond that. You should be enforcing strict quality standards across suppliers, logistics partners, and distributors.
Poor-quality materials result in product defects, returns, warranty claims, and damaged customer relationships. Fixing quality issues after production is often far more expensive than preventing them at the source.
Have a dedicated quality control team that focuses entirely on this. That's how important quality control can be in manufacturing process optimization.
Ineffective Communication Between Teams
This is a universal problem, not just in supply chain management. You will want to ensure that all of the different teams in your business are communicating with each other, especially regarding the supply chain.
When procurement, production, logistics, and sales teams aren't aligned, costly mistakes occur. Miscommunication results in:
- Incorrect orders
- Production delays
- Missed delivery deadlines
- Low customer satisfaction
Ensure that cross-team collaboration happens on every level possible, through the use of cloud-based communication platforms, shared dashboards, and regular coordination meetings. Everyone should be on the same page when it comes to the manufacturing supply chain.
Failure to Embrace Technology and Innovation
A big one for all manufacturers, you need to learn how to embrace technology and innovation at every level of the business. Your competitors are innovating and growing, moving forward at rapid rates, and if you wish to keep up with them, then it's time to do the same.
For example, there are many automation technologies like AI-driven forecasting, robotics, real-time tracking, and more that can start moving your business in the right direction. If you ignore technological innovation, you are going to start falling behind your competitors very fast and soon go out of business.
Ignoring Transportation Optimization
One of the major costs in a supply chain is related to transportation. That's why you cannot treat transportation as an afterthought.
Inefficiencies in transportation can result in drastically increased costs, due to poor route planning, partial truckloads, or reliance on expensive rush shipping.
You can only have inefficient transportation for a little while before your entire business starts feeling the aftereffects of it. Do what you can to reduce waste and consolidate delivery performance.
Frequently Asked Questions
What Is Manufacturing Supply Chain 101?
Are you a business involved in the flow and production of goods, services, and information? Well, that's essentially managed using manufacturing supply chain strategies.
It all starts with some raw materials. For example, if your business produces baked goods, it will start with wheat flour, eggs, milk, and other such ingredients, which are the raw materials.
The raw material is then converted through the manufacturing process into the final product. This final product has to then be transported over to the customer through the middleman, be it the retail stores or through whatever logistics system you are relying upon.
It's a very complicated system with many moving parts.
How Do You Avoid Waste in Lean Manufacturing?
There are seven ways waste can creep into the lean manufacturing supply chain. They include:
- Transportation
- Inventory
- Motion
- Waiting
- Overproduction
- Overprocessing
- Defects
As you can imagine, each step of the manufacturing process has the potential to bring waste into the system. For example, you might be transporting the items unnecessarily between locations. Or you might be holding more raw materials than necessary in your inventory.
Careful management of all of these steps ensures that you eliminate as much waste as possible and bring up manufacturing process optimization levels.
Use Our Supply Chain Management Tips
Manufacturing supply chain mistakes are often profit killers, quietly draining resources and reducing competitiveness. Avoid the various mistakes listed above and keep on culling all the waste in the supply chain.
No matter what you end up improving upon, even small changes can result in big results over time in your profitability. No action goes wasted when it comes to supply chain management.
If you enjoyed this article, please check our related articles on supply chain management on our website.
This article was prepared by an independent contributor and helps us continue to deliver quality news and information.
