Ram Chary, a seasoned supply chain management professional, talks about best practices he gleaned through his 20 years in the field. These, he says, are all essential skills that have to be mastered by supply chain managers across industries. Chary holds a master’s degree in finance and operations management from Purdue University, and was Executive Vice President at Global Commercial Services, Inc.
Top Three Best Practices in Supply Chain Management
In a cutthroat industry such as supply chain management, the practitioners that come up on top are always those who spot future trends and adopt them ahead of everyone else. Today’s cutting-edge philosophies become tomorrow’s industry best practices, and tomorrow’s best practices can become obsolete in the blink of an eye. This is due to the ever-changing regulatory and logistics environment; one that is influenced by a number of factors that, at first glance, don’t have anything to do with supply chains. However, certain best practices have stayed despite these changes, and supply chain managers would do well to adopt them as the basic pillars of their practice.
1. Supply Chain Financing — Supply chain managers are familiar with the stress that accompanies budgeting for both logistical and operational expenses, many of which are fraught with uncertainties of exchange rates and the availability of payment platforms. Supply chain finance, which is provided by a third-party provider such as a financial institution, unites vendors and clients under a single platform. The third-party provider can negotiate for discounts for prepaid payments to improve predictability, while offering inventory financing to ensure that orders are finished on time as well as making it easier for buyers to pay for those orders.
2. Improving Process Visibility — Most companies have trouble keeping track of orders and deliveries, relying on antiquated techniques such as spreadsheets, carrier-based tracking systems, and customized legacy applications. Industry leaders are now partnering with each other in developing software that allows the status of orders or processes to become visible across different functional groups. GPS-based tracking has also helped logistics providers send real-time data on the location of orders and deliveries to concerned process owners. The data gathered from these initiatives help decision makers in eliminating bottlenecks, consolidating shipments, and reducing informal pay-outs to middlemen.
3. Trade Compliance — While many companies have been historically hesitant to take on compliance projects due to what they perceive as unnecessary expenses, recent events have convinced industry leaders that investing in compliance is the only way to survive in a global economy. Origin management, which is something that has been long overlooked, is now inseparable from the rest of the field because of free trade agreements, which include import and export quotas between countries and within continents or zones. U.S. manufacturers have started seeing themselves as more than just U.S. companies. With operations outsourced to other countries, they have now begun to operate under different sets of regulations. While it is a pain point for companies that have just begun to offshore, the learning curve has become a bit less steep due to the currently available (and ever-growing) knowledge base.