Disadvantages of Poor Supply Chain Management
All businesses need systems in place to help them succeed each day and thrive long-term. For companies with complex supply chains, a supply chain management provider can be a beneficial system that simplifies the company’s daily operations and takes stress off of their administrative team. However, a poor supply chain management system can be costly in more ways than one. Here are three examples of how sub-par supply chain management can harm your business:
- Mismanaged Implementation – Changing a supply chain management system takes financial investment, time, and human resources. If not implemented properly, there will be wasted labor, service redundancy, and missed deadlines that result in significant costs.
To avoid these unnecessary costs, high-quality logistics providers always complete a thorough analysis before implementing changes to the supply chain. This ensures that they fully understand the client’s freight schedule, consolidation opportunities, and last-mile logistics needs before developing and implementing a new system.
- Inadequate Training – Integrating a new system into a working supply chain is complex and often requires restructuring and team-member training. This process must include detailed planning and clear, meaningful communication, or it could result in costly mistakes and excessive employee turnover.
If searching for logistics providers, always inquire about the training process and the usability of their tools and technology. An experienced provider should start with a clearly defined onboarding or transition process that can then be customized to fit unique teams and timelines.
- One & Done Mentality – Short-sighted logistics providers (focused on ‘getting the contract’ and nothing more) miss out on consolidation opportunities and other ways to improve their clients’ supply chain efficiency. The initial savings are realized, but any additional savings or growth opportunities get neglected. A company that relies on this type of provider will eventually fall behind their competitors and may not even realize why.
Industry-leading logistics providers focus on continual analysis. They are always looking for new ways to reduce their clients’ supply chain expenses or improve frequency and effectiveness.
A company that can provide quality supply chain management will have a good understanding of these examples and what disadvantages would follow. A good supply chain management system will reduce costs and allow each dollar to be used efficiently and effectively. With effective management, cost reduction, and risk mitigation, your supply chain and your business can stay ahead in a competitive market and reach a higher level of success than ever before.