- Efficient Supply Chain Management vs Effective Supply Chain Management
- 5 Basic Steps for Efficient Supply Chain Management
- Three A’s of an Efficient Supply Chain Management
The arrival of the COVID-19 pandemic changed our lives in many ways. This includes supply chain management and day-to-day business operations. With all these changes, how can we tell if our process is still efficient and effective? Let’s start with the difference between efficiency and effectivity.
When we say efficient supply chain management, we consider the best practices. This means you make the best of your resources. For example: physical, financial, and technological resources. An efficient supply chain management reduces cost and minimises warehouse waste.
Efficiency vs Effectivity
Efficiency looks at your internal factors. On the other hand, effectivity looks at your external factors. Efficiency may refer to how well and how fast you produce your product. But, effectivity looks at the quality of your service or product. Is the customer satisfied? For your supply chain to be considered effective, you must meet the demands of consumers.
Things you consider when looking at efficient supply chain management:
While, for effective supply chain management, you look at:
- customer satisfaction
5 Basic Steps for Efficient Supply Chain
I. Find dependable suppliers
When people choose suppliers, they often look at costs. However, this is not the only thing to consider. One must also look at the reliability of the supplier. Especially these days, when protocols and guidelines make business difficult. Suppliers must also adapt and be able to continue business no matter the current circumstances.
II. Invest in employee development
There are many things to consider when managing supply chain. As such, employees trained and educated do their work more effectively. This is a big factor that affects the quality of your supply chain. After all, your operations are in the hands of your employees. Wouldn’t you feel much more complacent knowing they are full trained?
III. Aim for continuous improvement
Some people who think they already have an efficient supply chain stop there. But this shouldn’t be the case. There is always room for improvement. Especially with the fast-paced and evolving world we live in. Improvements can be made anywhere from approaches to operations to equipment.
IV. Use new technologies
Which brings us to your next step. As part of improvement, consider new technologies. Solutions are always available for your daily operations. These solutions increase effectivity and efficiency. Moreover, they help you achieve your goals and provide insightful information. It might be a scary decision. But, in the long run, these always turn out to be good investments.
V. Improve returns management
There are seven fundamental warehouse processes. Yet, some people don’t always consider returns was part of those processes. However, this shouldn’t be the case. Returns management also affects customer perception and satisfaction. Remediating any returns should be quick, efficient and effective, too!
Three A’s of Supply Chain Management
The data from reports are also useful for traffic flow analytics. Consequently, this improves the mobility of people or goods. Additionally, it increases safety, reduces traffic congestion and reduces accidents.
Agility refers to how the company responds to unexpected changes. This deals more with the fluctuation of supply and demand. Operations must be able to keep up with these changes, otherwise it could lead to shortages or waste. And even if you have a setback, an agile supply chain helps you recover faster.
Adaptability is similar to agility in that they both deal with changes. But, agility requires speed. Adaptability focuses on the long-term. It means making decisions that will allow your company to thrive. Adaptable supply chains don’t stick to the same supply networks. Shifting approaches is also another characteristic of adaptable supply chains.
In a supply chain, the interests of all parties must be aligned. Misalignment causes problems in the long run. If one part of the chain cannot do their job, the rest of the links suffer, too. It is a domino effect. So in building a supply chain, make certain that all partners understand each others interests thoroughly.
Building a successful business includes having an efficient supply chain management. Otherwise, your products won’t get where they need to be.