The key to success in almost any business is availability – customers can only buy products if they’re on the shelf. But if your production process is held up by supply volatilities or poor collaboration with third-party suppliers, you risk missing deliveries to retailers. And that could harm your sales and ambitions for growth.
I recently had an email from the logistics manager of a consumer products company. He told me that his company was struggling to meet demand for products. He was regularly let down by suppliers, which impacted his production and caused delays in delivery. On top of that, he had pressure from above to reduce costs – but with volatile commodities prices, it was hard enough just managing his margins, let alone finding ways to save money.
He asked me what technology solutions we have that could solve his problems. I responded by saying that, as much as we would like them to, our solutions can’t necessarily fix problems. They can certainly help, but they have to be part of a bigger solutions process. And for his particular problem, that answer was collaboration.
Build a global network of trusted suppliers
If you outsource any part of your operation to external suppliers or third-party manufacturers, you run the risk of being let down. And that can hurt your production process and your ability to deliver goods on time. By building a network of trusted suppliers, you can mitigate against that risk.
With good collaboration, you’ll be aware of any issues quickly so you can proactively address them. If your production takes place in multiple locations, you can specify the closest local supplier rather than wait for international deliveries. And you can set up a series of robust service level agreements (SLAs), and ensure compliance at every point. All of which can aid your time to market.
Get a better view of your own processes
Good collaboration is not only important with outside suppliers. You also need to guarantee all stakeholders within your own business are communicating effectively. By centralizing your data into a common-use platform, every area of the business can see what’s happening everywhere else – all in real time. So purchasing, production, and shipping can see any bottlenecks and adjust their plans. With this kind of internal collaboration, you can make your whole supply chain operate much smoother.
React to demand volatility in real time
Better collaboration with retailers is also a high priority. If you have real-time sales data, you can build an accurate picture of how your products are performing. So, if a product is not selling well, you can slow production, reduce deliveries, and avoid overstocks. You can also address any shortfalls in your marketing and promotions strategy.
If a product is selling well, you can easily ramp up production and increase the frequency of deliveries. So, you can guarantee you’re able to meet increased demand, and your products are where they need to be – on the shelf.
Manage your margins on commodity prices
Whatever products you manufacture, you need the parts or ingredients to produce them. However, volatile commodity prices can make it difficult to manage costs. If the price of those commodities goes up, then your margins become tighter and your profits shrink.
With better collaboration both internally and with suppliers, you can easily see what parts you need and how the price of them is performing. So, you forecast more effectively, buying only what you need when you need it, and when it’s at its optimum price.
Enhance your efforts with software solutions
With ERP software, all of these practices can be made much easier. By hosting your data on a centralized business process platform, you can collaborate better throughout your business and streamline your working operations.
I received a very grateful reply from that logistics manager after implementing SAP Business One. He told me he’s finally managed to cut down some of the production issues, and even increase his profit margins.