People like to hold on to fixed ideas that they can turn to in case of doubt. Theories that, over time, have become clichés and even immovable monoliths. However, the fact that these ideas have caught on does not make them true. What’s more, their aura of infallibility makes them even more dangerous, as we assume them without question, and they are more difficult to extirpate.
In the supply chain, these topics often translate into standardized responses. Topics that are intended to be applicable in any situation, without taking into account the specific aspects of each supply chain or its specific needs.
The 5 tips on the Supply Chain that you should not follow
“The cost is above everything”
This advice is wrong for both a customer and a logistics provider. When we automatically believe this advice, we are nullifying many strategic options that could be vital to our company.
It is clear that companies need to watch their costs. However, making it the absolute priority can derail our supply chain. For example, an obsession with reducing costs in the short term can reduce investment in technology, resources and personnel, weighing down the future of the company. Or it may also clash with the company’s strategy, which prefers to opt for a premium service profile assuming a higher cost.
On some occasions, the obsession with cost is so high that the client accepts that the provider makes fewer resources available to him, which will inevitably affect the quality of the service received.
“What your supply chain needs is people who know numbers”
Logistics has always been a profession closely linked to numbers. The amount of statistics, data and scales that can be obtained from a supply chain is almost infinite. And recent years have only accelerated this situation, especially with the advent of e-commerce and Big Data, in turn increasing professional profiles oriented to work with figures.
However, we must not confuse this process with the elimination of other virtues among our teams. The person who leads the supply chain of our company does not have to be the one who meets the highest scientific, mathematical or engineering profile. It is possible that, in these positions, other skills such as leadership skills, interpersonal communication, the ability to improvise solutions or achieve effective collaboration between different departments are just as valuable.
Your supply chain is going to need you to keep a close eye on their numbers, but you’re going to be wrong if you neglect the rest of your skills.
“The only way to optimize is to achieve large volumes”
Logistics is very sensitive to economies of scale. Having large volumes makes your life easier in many ways, both when it comes to saving costs and designing processes. The transported kilo is more profitable if we move full trailers than if we send loose pallets or packages. Or it is easier to face investments and improvements when we can distribute the investment among a large number of orders.
However, the ease that volume brings often makes one forget the amount of improvements that can be achieved, regardless of our volumes. Do we manage our warehouse correctly, locating the references we have in the most optimal way to place orders? Do we correctly anticipate the demand that we are going to have? What is our percentage of correct deliveries? What expense does it cost us to have to deal with all these incidents? Have we developed a supply logistics that makes life easier for us?
The lack of volume should only serve as an incentive to make the most of all the optimization opportunities offered by a supply chain.
Having a fully automated warehouse may sound great, but if it doesn’t meet your needs it will be a wasted investment.
“The solution to everything is technology”
These tips share a common trait: make a virtue a defect. By trying to give a single answer to something as complicated as a supply chain, they oversimplify their vision and fail to understand the whole. Something that happens again with this advice. As technology is key in the development of logistics, sometimes we get confused and trust everything that it can offer us.
Reality, however, does not work that way. Knowing when to innovate is just as important as the innovation itself. Having a fully automated warehouse may sound great, but if it doesn’t meet your needs it will be a wasted investment. Implementing it in a low-turnover warehouse can mean a high cost for very few advantages, being a bad bet.
It may even be that what your supply chain needs most is not a technological leap, but something else entirely. A better organization, communication and cooperation between the links, establishing a description of the requirements that our suppliers must have and a classification of their performance, rethinking our routes or the locations of our warehouses, etc.
Also, like all investments, it takes time for technology to start paying off and covering the initial expense. An investment in technology should not be seen as a shortcut to immediate economic benefits.
“You have to achieve the perfect supply chain”
This advice fails because it starts from a fundamental error: there is no such thing as the perfect supply chain. What we do have to pursue is the ideal supply chain for our company. And, since no two companies are the same, no two answers will be the same.
In addition to the traditional difference between companies that prioritize costs and those that opt for a more expensive premium service, the supply chain offers other possible priorities. For some companies, the key will be in visibility and traceability, and that is where their efforts will have to go. In another case, perhaps what they need is the most powerful warehouse management possible, either due to its complexity, the high turnover, the number of SKUs… Or its critical point lies in giving entry and exit to the greatest possible number of trucks, or to process the greatest number of shipments, or to process fewer shipments but with a practically perfect success rate.
It is difficult for us to focus on perfecting all areas at the same rate at the same time. And even if we could, we would be forgetting to establish the priorities we need.
In conclusion, we have to be wary of all those magic formulas that want to find a single solution and do not take into account the complexity and particularity of each supply chain.
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