Three Tips for Diversifying and Strengthening Your Supply Chain - Part 3

The past 2 years have shown that relying on a single raw materials source is a recipe for disrupted supply chains and an inability to meet customer demand.  A robust supply chain is achieved not only by diversity, but also reliability and resilience.  An effective procurement and supply chain organization should be one that brings value to the overall organization, which is accomplished by having the right strategic and tactical approach.

We’ve outlined three actionable tips that can be used to consider how to build a more diverse and robust supply chain.

Build-In Resilience

Having a robust supply chain means building a repeatable process and system that has the resilience and flexibility to adapt to future changes.  The tips highlighted here shouldn’t be viewed as one-time exercises but instead an approach that emphasizes continuous monitoring and improvement. 

• Do you have contracts in place with key suppliers that spell out key commercial terms beyond price?

  • Volume commitments
  • Payment terms
  • Quality expectations
  • Liability
  • Communication expectations
  • Value added services
  • Are they standardized across suppliers?
  • While price is important, other commercial terms can have a significant cash flow impact and you may find additional value to be had

• Establish metrics and key performance indicators (KPI) to create a framework for continuous monitoring and improvement

• Develop a continuous planning methodology and system

  • Rolling 12-18 month horizon for demand and supply planning
  • Product development aligned with sourcing for new product launches
  • Inventory planning strategy aligned with demand plan
  • Integrated metrics to drive continuous improvement

Our supply chain and operations advisors are experienced in many manufacturing and distribution companies. We help find the best way to optimize your supply chain management and get the results you want.