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6 Supply Chain Issues That Hurt Your Bottom Line

6 Supply Chain Issues That Hurt Your Bottom Line

6 Supply Chain Issues That Hurt Your Bottom Line
Image via Flickr by Victor1558

Effective supply chain management is the best way to cut costs and increase profits, but there are some issues that do more harm than good if they’re not handled correctly.

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#1: Supplier Relationships

Suppliers play a critical role in the supply chain. Lack of communication between supply chain managers and vendors can have a negative effect on the overall success of a company. The best strategy is to focus on long-term partnerships with each major supplier. Understand their capacity, as well as their strengths and weaknesses to avoid disruptions and to develop a seamless process that boosts productivity instead of damaging it.

#2: Consumer Relationships

The end-users are the most important link of the supply chain and have the most influence on your bottom line. Again, communication is the key to success. Concentrate on the demands of your customers and tailor your supply chain to meet those needs. Interaction on a personal level will keep consumers involved in the supply chain process and will help you stay ahead of the competition.

#3: Lack of Fresh Data

Depending on last year’s sales or quarterly predictions is a big disadvantage in today’s fast-paced market. Companies that rely solely on stale data often experience shortages, surpluses, and other supply chain issues that eat away at profits. In the era of ‘big data’, businesses can watch statistics and sales in real-time, along with inventory levels, consumer trends, and cash flow to keep the supply chain strategy on target.

#4: Technology Dependency

Modern technology and statistic monitoring play a big role in effective supply chain management, but becoming too dependent on these systems is just as harmful to a company’s success. Without an organized strategy, even the most advanced SCM technology is one more cost deducted from the bottom line. IT is important to a successful supply chain, but it’s only a piece of the puzzle.

#5: Mediocre Talent

A supply chain can only be as successful as the people who manage it. In the past, many companies haven’t given supply chain management the attention it deserves in the office. A dedicated SCM team with experienced and knowledgeable members will boost profits as well as sales in the end. Ongoing training and professional development are a part of every successful supply chain department.

#6: Cost Reduction Priorities

One of the biggest mistakes a supply chain manager can make is placing too much emphasis on reducing costs. Saving money will obviously increase profits, but if cost reduction results in loss of quality or shortages in inventory, it will have a negative impact on sales in the long run. Productivity and innovation are the focus of most successful companies, with cost reduction techniques falling naturally into place.

The supply chain can make or break a company, depending on how the strategy. Paying attention to these key issues can make sure your business reaches its full profit potential without hurting your bottom line. [/show_to]

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