Seven Top Questions to Ask to Create an Efficient Supply Chain

According to the bellwether Institute for Supply Management, April marked the 23rd consecutive month of overall growth for the U.S. economy.  In addition, the ISM reported that the U.S. manufacturing sector is in the midst of 21 months of economic expansion.  But despite this positive news, many businesses remain unconvinced that the economic recovery is here to stay, and have taken a very cautious approach to planning and investing in the future.

Not surprisingly, businesses are taking a hard look at their supply chains, with an eye to finding efficiencies, correcting past mistakes, doing things smarter and hopefully cutting costs.  And, with logistics costs accounting for as much as 5-8 percent of revenue, it’s a good place to look.

As you consider changes to your supply chain – be they minor tweaks or a major switch in operations – here are a few questions to keep in mind:

  1. Scalability – Is my Supply Chain Flexible Enough to Adapt to the Ups and Downs of the Business Cycle? You know the highs and lows of your business better than anyone – and hopefully your logistics provider is a close second.  But does your logistics provider allow you to ramp up your level of service when needed, and then scale back, or are you locked into strict service levels?  If you find that your carrier does not allow you the flexibility you need, you may want to shop around.
  2. Range of Options – Why Pay Express Service Prices when a Shipment isn’t Urgent? Many businesses unknowingly are paying for higher levels of service than their shipments actually need.  Sometimes this is inadvertent, and sometimes it’s because a carrier offers a “one size fits all,” “take it or leave it” logistics solution.  Make sure your carrier has the capability to offer various services and delivery options that meet your business needs.  Do not pay for more service than you need!
  3. Customized Solutions – Can your Logistics Provider Work with you to Solve your Specific Logistics Needs? The logistics industry has advanced so much in recent years that it is no longer acceptable for a logistics carrier to offer inflexible, “out of the box” solutions.  Instead, a good logistics provider will work with you to understand your business goals, integrate your business processes, and offer you a customized solution.
  4. Customer Service – Is there Someone to Call when Things go Wrong? In the rush to cut costs and integrate technology, many logistics companies farmed out their customer service function to automated call centers and centralized 800 numbers.  As a result, businesses increasingly have no one to turn to when a last minute change needs to be made to a supply chain, or when a mistake or breakdown occurs.  The good news though, is that some logistics carriers still understand the importance of person-to-person relationships, and take great pains to ensure that customer service remains a priority.  When it’s the middle of the night, and you’ve got a problem with a top customer’s shipment, you’ll be grateful that you took the time to choose a logistics provider that values customer service.
  5. Cross Border – Can my Logistics Carrier Accommodate Shipments to Canada?  U.S. businesses are increasingly seeing the potential of tapping into Canada, with its 32 million potential customers, and comparatively strong economy.  It’s important to realize though, that as close as Canada may be on the map, there is a tremendous regulatory maze to clear before your goods can enter that market.  In fact, the U.S./Canadian border clearance process has gotten even more complicated in recent years, with each country introducing new security mandates and technology standards to supplement compliance requirements already in place.  It is absolutely essential that you choose a logistics carrier that has bona fide experience with cross border logistics.  An experienced carrier will provide flawless compliance with all required paperwork, and move your shipments seamlessly into the Canadian market.
  6. Think Out of the Box – What about Taking Charge of your Suppliers’ Shipments, or Shipping Direct to your Customers? As you look to improve supply chain efficiency, it’s important to put every current “best practice” under the microscope and ask if there isn’t a better way to get the same result.  For example, if your business depends on multiple shipments arriving from multiple vendors/suppliers, would it make sense for you to take control of those shipments?  An inbound freight management system would allow you to streamline operations and cut costs by choosing the transportation provider to carry all your inbound shipments.

    Another way to cut costs and improve efficiency might be to eliminate a distribution center stopover from your supply chain.  Many businesses find that they can shave days from their transit schedules by eliminating a costly and unnecessary distribution center stop, and send shipments directly to their end destination.  Not every logistics carrier can offer DC Bypass, but it’s worth the time to find a carrier who can.

  7. Returns ManagementDoes My Supply Chain Maximize the Bottom Line Impact and Customer Service Opportunities of Well-Managed Returns? Two facts to keep in mind:
    1. Forbes.com found that as much as $100 billion worth of goods are returned each year to U.S. companies, a figure that can represent as much as seven percent of a company’s gross sales.
    2. The 2007 National Shopping Behavior Survey, conducted by KPMG LLC financial advisory company, found that 58 percent of consumers said that a company’s returns policy was a factor in their decision whether or not to shop with that retailer.

    With this much at stake, it’s essential to have in place a returns policy that ensures customer satisfaction, and that also allows you to recover some of the costs associated with replacing goods and returning unused goods to inventory.  Many businesses are realizing the value of repairing or refurbishing returned merchandise, and offering it for sale on a secondary market.  And of critical importance, businesses are realizing the importance of having logistics processes in place to guide the returns process.

Clearly, there is a lot to think about when considering changes to your supply chain, and many options for improving efficiency.  What are some of your top questions when shipping cross-border?  Ask away!

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One Response to Seven Top Questions to Ask to Create an Efficient Supply Chain

  1. I think flexibility of the supply chain is the most important thing under this economic situation. Because business should be able to adapt to demand fluctuation more effectively.

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