There’s no deep personal failing in making a mistake, provided you learn from it and move on with your best intentions in mind. The same goes for business. You would be hard-pressed to find a company that hasn’t put a foot wrong in any possible way. Almost every company has had a product that didn’t quite meet sales expectations, may have predicted market success that didn’t come to fruition, or made an internal hiring decision that could have been better.
Once you accept these mistakes as somewhat inevitable, you can get over the fear of putting a foot wrong and thus never risking a worthwhile approach as necessary. Moreover, if you’re mindful, you can learn from the mistakes of others compared to your own.
That’s how this article is structured. Supply chains are often one of the more complex networks to get right in modern business life, particularly if you manufacture. For this reason, this article discusses eight supply chain mistakes new businesses still fall into, and provides a few methods for charting your path as part of this:
Poor Inventory Management
A well-structured supply chain means almost nothing if your inventory management isn’t up to scratch. Of course, this can apply digitally too – if your software service suites are functioning well but have many security vulnerabilities, that’s a problem.
For manufacturing or the management or stock, stock rotations, appropriate tracking, careful handling to prevent damage, and secure storage environments are essential. Without investing in those processes, damage, loss, theft or other challenges can become a common occurrence. Regular staff training, investing in storage areas, and correctly tracking and delivering items, are methods that should be worked out before you reach out to suppliers or send products elsewhere.
Inadequate Supplier Relationships
It might seem as though the supply chain is a somewhat autonomous network that you sign up to and maintain every now and again. In reality, supply chains are built on relationships. From a chef working with a fish buyer who visits the early-morning market to catch the best catches of the day and delivers them to the kitchen, to the company you work with overseas that will manufacture 10,000 of a part you need for your final product, managing these connections well is essential.
Loyalty, helpful feedback, paying invoices on time, agreeing upon delivery dates, and also flexing your own weight in the relationship (such as complaining about damaged goods), can help you move forward as time goes on.
You’ll also learn the intricacies of certain supply chains as you move forward, from the big names in certain fields, to negotiating better deals with other suppliers when your contract runs out. This way, you can maximize the possible benefits of the correct approach, all while leveraging lean and supply chain services.
Lack Of Backup Plans
You don’t have to make a supply chain mistake for a supply chain shortage to happen, but they need to be planned ahead of time. During the Covid-19 pandemic, microchips were in short supply, leading to many companies having trouble fulfilling orders for their flagship products. Thanks to most silicon chips being produced in one area most of all (Taiwan), this impacted international trade quite severely.
Luckily, only few industries are like this. That’s why having backup options on hand can be so helpful, even if it means you have to pay a little extra for an emergency fulfillment or negotiate a temporary contract after a review. If you have backups in place, then you won’t have to start from scratch any time you notice a shortage.
Overlooking Quality Control
Quality control is far from a final inspection process, but a practice you keep up at every stage of the production journey, and yes, that also means quality control. You can think of the fish buyer discussed above, as the head chef might reject some fish that aren’t as good as their clientele would expect. Perhaps a luthier might reject a certain kind of spruce sheet being provided to them because a knot in the wood indicates that they can’t manufacture a guitar or violin out of flawed material.
Overlooking quality control is a supply chain mistake. It enables having suppliers automatically hand you whatever they have, as opposed to what will satisfy your business, and speak proudly of it. Of course, certain services and suppliers will have their own approach to QC, and it’s worth reviewing that in advance or asking them about it, and then conducting your own when accepting deliveries or delivering your own goods. Bad QC can quickly cause a supply chain relationship to fail, especially if repeated discounts and other compensation have to be processed.
Ignoring Demand Forecasting
Of course, you’re not the only node being served in a supply chain network. Demand forecasting can help you prepare in advance for supply issues ahead of time, instead of solely relying on the just-in-time system. It will involve analyzing historical data, market trends, and other necessary factors in your industry to predict how much customers will want to buy and be prepared for it.
Ignoring demand forecasting is a supply chain mistake that can have serious consequences for businesses if they assume too much or little, leading to waste or excessive cost. In contrast to that, inadequate inventory levels can result in stockouts, leading to lost sales and dissatisfied clients. You don’t have a crystal ball, that’s for sure, but you can still use best guesses and trends in past data to see how to prepare. For example, preparing well in advance of the festive period is usually a good idea. It’s why many businesses are even using industry 4.0 tools to help with their supply chain management, to make certain that plans are developed with an exacting eye.
With this advice, you’ll be certain to avoid some of the most common supply chain mistakes new businesses make. Sure, you get to learn lessons over time, and so one issue shouldn’t spell the end of the world. It’s more about avoiding systemic or repeated errors. We hope this article can help you on that journey.
