What You Need to Turn Your Supply Chain into a Value Chain

Published : November 25, 2015


Getting the most value from a product is the primary focus of a company as a whole. This is typically achieved through a combination of sales profit, customer retention and low production and fulfillment costs. Your supply chain may work just fine, but it could be bringing you much more value. When you transform your supply chain into a value chain, you shift the paradigm into something more than a series of data points—a complex yet integral step in developing the scope and efficiency of your company's offerings. You may be ready to for a new supply chain strategy, but how do you take the first steps of transforming basic function networks into extended value for your company? 

Better Incoming + Outgoing Processes = Growth

Developing core competencies in both fulfillment and order management is where the value equation begins. That said, adjusting your relationship with a single supplier in the chain or negotiating a lower rate for a component doesn't necessarily add lasting value to the company as a whole. Value should be perceived as wider in scope, the "long game" of a more efficient—though potentially more costly—supplier that has consistently high fill rates over a cheaper, unreliable one. Just as making investments with money on a personal level, investing in slower, more established parts of the supply chain will earn more reliable dividends over time. For example, better packaging segues into fewer damaged shipments, which in turn leads to happier (and repeat) customers. 

Divide and Conquer

Upgrading your supply chain efforts will certainly impact your business as a whole, it’s not necessarily an endeavor that’s made for a holistic approach. For example, a fulfillment center professional might concentrate on minimizing costs in their leg of the product journey, while sourcing and customer service might do so in their own respective areas. This will naturally require some inter-departmental cooperation and communication, but value chains can and do operate with autonomous units touching only briefly to complete the fulfillment process.

Don't be afraid to incorporate "huddles" into your supply chain strategy and make each department responsible for finding and implementing their own value-added strategies. Hold periodic team meetings within your fulfillment center to determine where your employees see room for improvement. Even if their suggestions aren't feasible at that moment, they may become more viable as your company adds order volume or suppliers over time. This approach not only gives you important insight, it makes your employees feel valued and motivated.

Listen to Your Suppliers

Value added for you often means more robust purchasing, or more frequent purchasing, from your vendors and third party logistics companies. This win-win scenario can be an extremely motivating one for discussions and brainstorming with your supply chain nodes, provided you open the door to talks. Ask your suppliers what they can offer your company, and, if they're willing to divulge, some improvement ideas gleaned from industry peers. Remember, you're typically one of anywhere from hundreds to millions of other customers, depending on the provider. Chances are, they know some tips and tricks that would be a perfect fit for your current supply chain setup. 

Supply chain strategy isn't just about crossing the finish line, it's about making good time on the way there. Focusing on value throughout your supply chain will keep you in a cycle of continuous improvement and safeguard against stagnation or complacency—two forces that are the most ruthless opponents of success. Building a value chain won't happen overnight, but once you begin to move in that direction as a company, you may discover that improvements tend to multiply, especially in the busy hive of industry that is your fulfillment center.

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Topics: Supply Chain Logistics

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