In the first part of our series comparing the merits of in-housed against outsourced logistics, we looked at how the cost of keeping supply chain logistics in-house compared to that of third party logistics.
Today, we’ll be taking a look at efficiency.
The secret to a growing, thriving business is customer satisfaction. Satisfied customers are repeat customers. Satisfied customers tell their friends about you and your products. Satisfied customers keep your business alive. So, what makes sure that your customers are satisfied? Your supply chain.
Customers want their orders to arrive correct, undamaged, and as quickly as possible—that requires a logistics team that keeps your supply chain organized and efficient.
Is your supply chain running at peak efficiency?
It's impossible to compare the efficiency of your existing, in house order fulfillment process with the services available through a 3PL without a clear understanding of your present program. You need to know how to effectively judge your supply chain's efficiency.
Here are a few of the factors you should take into consideration as you evaluate the efficiency of your in-house supply chain. And, if it's not running smoothly, it may be time to consider outsourcing your fulfillment services to a third party provider.
Measure your lead time.
Lead time is the amount of time it takes to complete a single task in the order-fill chain.
- How long does it take, for example, from the time an order is received until the product actually heads out of the warehouse doors?
- How long does it take for a package to be delivered once it has been processed and shipped?
Minor lag times in these areas are crucial indicators of your supply chain efficiency. There are so many individual steps in the order-fill chain that minor delays all along the chain can add up to major delays on the customer's end.
Watch those unplanned orders.
Unplanned orders can be both a blessing and a curse. A jump in demand means more business and revenue, of course, but unplanned orders can also throw wrench in the spokes of your fulfillment machine.
Can your order-fill process gracefully handle unplanned orders?
You need a supply chain with the capacity to absorb unplanned orders without causing delays or disruptions to the regular flow of product handling and delivery.
Look to the future.
Forecasting future demand is a subtle art. Every business struggles with trying to plan for future growth without overextending man hours and materials. Does your supply chain have the flexibility to expand and contract with your business needs? And, can it do that without costly waste?
Measure your backlog.
A certain amount of backlog is to be expected in every business. This can be caused by an unexpected surge in orders, a shortage in material availability, even computer glitches and machine malfunctions. But, if a huge backlog of product and orders has become the status quo, you may need to look carefully at its cause. Is it because of the manufacturing process, or could your order fulfillment processes be to blame?
Consider customer satisfaction.
This is the holy grail of supply-chain efficiency— the one measurement that truly shows how well your order-fill department is working.
- How satisfied are your customers?
- Are their orders being filled accurately?
- Are those orders arriving on time and in perfect condition?
If the answer to any of these questions is "no," it's time to rethink your order-fill process.
How Does Your Supply Chain Measure Up?
Weigh all these factors carefully. Each of them affects the efficiency of your supply chain and, therefore, the satisfaction of your customers. If it turns out your in-house doesn't measure up, it may be time to bring in a pro. Consider putting your supply chain in the hands of an experienced third party provider.