The Collaborative Supply Chain Challenge: When and Where to Share the Burden

Published : December 11, 2014

business-people-shaking-handsSince nearly the beginning of commerce, the supply chain has been one of the single most critical challenges to business success. But while fleets of trucks and massive cargo tankers have eclipsed horse-drawn wagons and steamboats, the modern supply chain is just as critical and complex as ever.

After all, without a strong supply chain getting raw material to factories and finished products to consumers, the best product concepts and the most aggressive ad campaigns in the world won’t be able to keep your business in the black.

You need the right key performance indicators (KPIs) to help you track the success, manage failure, or identify your supply chain challenges.

While some of your in-house processes and departments may be ideally suited to the role they play in the delivery of your products, others may be struggling. Once you've identified the strengths and weaknesses in your supply chain, you can decide whether or not to bring in a third party logistics provider to fill in the gaps.

Which Key Performance Indicators Are Most Critical?

If you’re going to identify those weaknesses in your order fill process that present a danger to your operations, you need to know which metrics are most critical. Take a look at these 5 indicators pinpointed by business intelligence company Klipfolio to see how you stack up:

  1. Your inventory turnover rate. Does your company sell all of its inventory in a given year or are you racking up carrying costs?
  2. The end-to-end journey of an order through your supply chain—from inception to delivery. Are your orders getting to your customers in a timely fashion? And, are those orders being filled accurately?
  3. Your product-return rates. How many of your orders are ultimately returned? And, what was the reason for those returns? Did your products fail to meet consumer expectations and needs, or, were those packages or their contents damaged in transit?
  4. Your order fill lag times. How much time does it take from the moment a customer places an order, either on the phone or through the Internet, until your product is in their hands?
  5. The accuracy of your inventory. Are the must-have items in your catalog immediately available, or, is your inventory clogged with products that simply aren't moving?

Is It Time To Collaborate?

Once you've identified the key areas of your operation that need attention, you can decide how best to correct those deficits. Collaboration is often the answer. Here are some tips for making the most of your collaborative efforts.

  • Choose wisely. Vet possible third party vendors carefully. You've identified the holes in your supply chain; be sure that the company you choose to work with is the right one to fill those holes. Ask yourself, "Just what services am I looking for?" Do you need packaging services, for example? A help desk? Make sure the company you choose to work with has these services in place.
  • Communicate often. Keep the lines of communication open. If problems arise on either end of the collaboration, you want to have an established relationship based on transparency and trust.
  • Define clear goals. You know which gaps in your supply chain you're trying to fill, but your partner may not. Simply signing up for their one-size-fits-all service is not going to achieve the collaboration you need. Make sure that your new team has all the details they need to design a program with your specific goals in mind. While signing a boiler-plate contract may seem like the easy route, "working through all the details [is]… usually the best approach."

In our rapidly expanding world marketplace, collaboration may not only become more common, it may become the new norm. Use intel from your supply chain KPIs to make sure you are focusing your collaboration efforts where they will do your business the most good.

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Topics: Supply Chain Workforce Management

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